Good credit plays an important role in your financial life. A good credit score is used for more than just getting a credit card or a loan. Credit scores demonstrate your history of paying your debts to entities that loan you money.
As Founder of Milwaukee Hard Money and The Hard Money Co., Scott Lurie, references popular quote, “Those who fail to learn from history are condemned to repeat it,” – referring to credit bureaus as historians. As historians they are looking at three things, your ability to pay your bills on time, your ability to pay your bills in general, and your ability to be a financially sound person.
Traditionally, banks will use a tri-merge, which is a merge of the three credit bureaus to establish a merged value of what your score is. The lower your credit score, the more challenges you will be faced with. On the contrary, the higher your score, the more opportunities for success. Creditors and lenders want to do whatever they can to hedge that risk and make sure you’re a safe bet and someone who’s likely to fulfill their obligations and repay that money on time every month.
As an asset-based credit lender we are not necessarily looking at your credit score as a sole judgment, but it is is important, as is establishing your credit. Establishing credit lines like buying a house, buying or leasing a car, taking out a loan, etc. will increase your credit when investing responsibly. It’s important to strive for a higher credit score as those with higher scores typically receive more favorable credit terms, which in turn, means lower payments and less paid interest over the life of the term. Below is a quick look at general credit score ranges and how they rate.
- 300-579: Poor
- 580-669: Fair
- 670-739: Good
- 740-799: Very good
- 800-850: Excellent
Typically, our investors are required to have a minimum of a 620 score to qualify for our hard money loans. However, we encourage everyone to strive for 700+, with 740 being very good. If you’re curious about your ability to receive credit, we advise you to be aware of inquiries as they can harm your score.
Be smart about your money, in some respects your credit score is your flex point in negotiations and the key to your success as you go forward. Banks will always use credit scores, so it is important to keep a line of sight on your score as there are many free and credible sources out there for checking in on your score.
In the below episode of The Hard Truths, Scott Lurie discusses why, even with an asset-based company, an investor’s credit score is still an important part of the approval process for lending.
Plus, things to avoid that hurt your credit score, as well as what you can do to improve or keep a good score.
Subscribe to The Hard Truths podcast for more insight and education that Scott has learned over the years, to better prepare you for the road ahead. The mission is to empower every listener to have the courage and knowledge needed to build lasting, financial independence through real estate.
The Hard Money Co is the best source of funding nationwide for real estate investors looking for cash. As a credible and reliable partner we offer funding options to get your projects started and finished. Contact us today to learn more about our diverse portfolio and what The Hard Money Co can do for your next opportunity towards success.