The thought of being a property owner is always overwhelming. Investing in Real Estate is one of the finest ways to acquire wealth in the long run. The biggest problem faced by Real Estate Investors is the finance they need for diversifying their portfolio. Most potential investors do not qualify for a bank loan because of low or bad credit scores. Starting the property buying process with bad credit can make it seem nearly impossible to get a loan until you find alternative methods to avail loan.
The private money lenders or the mortgage lenders care less about bad credit than most people think. These days private or individual lenders have been making more loans to buyers with below-average credit scores. Although having lower credit scores can deeply affect your mortgage rate and the down payment you’re required to make.
In this blog post, we will discuss buying a property with bad credit and knowing your credit score.
WHAT IS A CREDIT SCORE?
A credit score is a number that defines the creditworthiness of any consumer. It generally ranges between 300-850. The credit score system was created by FICO (Fair Isaac Corporation) and the average FICO score range is mentioned below:
- Excellent- 800 -850
- Very good – 740 -799
- Good- 670 – 739
- Fair- 580 – 669
- Poor- 300 – 579
A person’s credit score is based on several factors such as the total number of accounts, level of debt, and all the repayment details. If you have a high credit score that means you can easily get approved for loans at lower interest rates.
The mortgage lender rather than considering a bad credit, they go for qualifying credit. It is the minimum score required to approve a mortgage application. The minimum credit score is different for different lenders because lenders don’t necessarily care about your credit score. They are more focused on timely repayments.
HOW TO BUY AN INVESTMENT PROPERTY WITH A BAD CREDIT?
Talking about credit scores then, a fair score is 580 to 669, while a poor score is 300 to 579. As discussed earlier, there are private money lenders with whom you end up. While approving a loan they do not merely look at your credit score but focus on many different things like the amount the borrower has available for a down payment, his overall amount of debt, financial stability, and debt collections.
You can easily purchase an investment property by getting a bad credit loan. You must make a smart choice in choosing your financial lender. Your lender must be reliable , transparent in its terms & conditions and must have proofs of fund for a convenient lending process.
MAKE YOUR FINANCE BETTER
You can easily avail loan from a trustworthy private money lending company such as 5F ASSOCIATES where we provide all kinds of loans that suit your requirement with very easy repayment methods. If you also want to rule the real estate market and want a hassle-free loan, please feel free to contact us at any time.
Real estate investors can also easily invest in purchasing a distressed property and then easily flip it for profit. Fix & Flip Loans are easily available that are a short-term investment but yield a high return. We also specialize in Fix & Flip Loans and all kinds of short-term and long-term investments with zero hassle.