Do Hard Money Lenders Check Credit?
A question for many beginner investors is: “Do hard money lenders check credit?”
The answer? Yes and no.
In the hard money lending world, there’s a big split in lenders’ approach to credit scores.
National Hard Money Lenders and Credit
On one hand, there’s the national lenders, the big hedge funds, the major institutions. For them, it’s all about credit and experience.
You end up being a number to these bigger companies – a data point. So they focus on the numbers that represent your success. The most important of these numbers is your credit score.
The larger the institution, the smaller the box they need you to fit in. So if you’re looking for money and your credit is below 680, you probably won’t fit in the box of national hard money lenders.
Local Hard Money Lenders
On the other hand, there’s smaller, local hard money companies. These local hard money lenders won’t check credit as the basis for the loan.
Most local hard money lenders look at you and your deal. They’ll want to know:
- what you’ll do with the property
- what the house is like
- what the numbers are
to see whether you have a good chance of making money from the deal.
If you’re investing while your credit score is lower, gear yourself toward these local lenders. There are plenty of these hard money lenders around – hundreds in the Denver market alone!
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