Whether you want to apply for a student loan, get a new credit card, or finance your next fix-and-flip—nothing matters as much as your credit score. The credit score, which is also known as the FICO score in some places, is used as a metric to determine whether or not an individual qualifies for a loan.
In other words, it defines your ‘creditworthiness.’ Several factors influence your credit score. For instance, if you pay back your loans on time and have no record of defaulting, your score will be higher.
Let’s take a look at what else the credit score entails and what you can do about it:
What happens if you have a bad credit score?
Every time you apply for a loan with a financial institution, it takes some time for the request to be processed. During this time, the bank checks whether you can pay back the loan on time or not. If they think otherwise, you won’t qualify for a loan at all.
Even if you do qualify, the bank will charge a high markup to compensate for the uncertainty posed by giving a loan to someone who they see as not trustworthy. They’ll either charge a higher lending rate or will reduce the payment period. Most people with bad credit scores also find it hard to rent an apartment, getting a new job, security clearance, or insurance premiums.
To fix the issue, you can opt for three possible courses of action:
- Get in touch with a credit repair agent
- Start paying back your loans on time
- Apply for a hard money loan
How does a hard money loan help?
If you feel like a bad credit score has closed down all possible doors for you, you’re wrong!
Unlike a conventional bank loan, you can qualify for a hard money loan even if you have a very poor credit score. Since hard money loans are used to finance real estate purchases, the property itself is used as collateral.
No matter how topsy-turvy your payment history has been, the lender will only be concerned about the value of the collateral. Theywon’teven be concerned with your monthly stream of income.
Since these types of loans are not regulated by the central bank, there’s no fixed lending rate. You can speak to the lender and mutually agree upon terms and conditions that suit both parties.
For further details about hard money loans and how to acquire them, head over to the website of Global Capital Partners Fund LLC. They offer a number of commercial real estate financing options on easy terms in Baltimore MD.