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The Importance of FICO Scores To Hard Money Lenders

Posted by Jim Emerson

Jun 16, 2016 11:56:34 AM

As a commercial hard money lender, we understand the importance of one’s FICO score.  Therefore, we want to share our experience and how one can increase their FICO scores to improve their chances of getting a hard money loan. 

One’s FICO score is the benchmark used for decades by underwriters to assess a mortgage borrower’s creditworthiness. It remains the nation’s definitive credit-evaluation tool. This applies to traditional bank loans, as well as hard money loans provide by Private Mortgage Investors.

That said; one’s FICO score is also the benchmark used to evaluate an insurance company’s risk, or an employer’s decision to hire a person or a landlord’s approval to rent or lease their property. 

FICO scores are like one’s DNA.  It’s a tell-tale indicator of whether one is a responsible person and one who can be trusted. Hard Money Lenders such as ourselves also have to rely on these scores to determine whether we can/should make a loan to an individual who is unable to secure a loan from traditional lending sources such as banks.

One’s credit profile includes three credit reports (Equifax, TransUnion and Experian).  Creditors (credit card companies, banks, mortgage companies, etc.) report your credit activity to these credit reporting bureaus periodically.

Creditors aren’t required to report to all three bureaus, which means one’s credit report and one’s FICO scores could be different with each bureau.  When you apply for a residential hard money loan, lenders could look at scores from any or all of them.

FICO scores range from 300 to 850, the higher your score, the better. Scores are calculated using the information from your credit reports. These reports contain the information that each credit bureau has on file about you.  The information that the credit bureaus collect includes the following; (i) how many credit accounts you have, (ii) how many times creditors have requested information about your credit, (iii) how you’ve paid your creditors, (iv) any judgments against you, (v) any IRS liens, (vi) how many creditors have turned your account over to a collection agency and (vii) wehteher you’ve filed for bankruptcy. These are factors that determine one’s credit score.

Married couples don’t have a joint FICO score. They each have individual scores. The difference is that when you are single you usually only need to worry about your credit habits and profile. However, when you become married, your spouse’s credit habits and profile have an impact on yours. E.g., if you have a credit card in both of your names and it doesn’t get paid on time, it can affect both of your FICO scores and not in a good way.

You can get one free credit report form each of the three major credit bureaus (TransUnion, Equifax, and Experian) once every 12 months by visiting  However, the site doesn’t provide credit scores or more specifically FICO scores. 

 Also be cautious of other websites that offer free credit reports.  Many of them are only free for a short period of time and then you get charged. Always read the fine print before buying a credit product that you may not need. Use only the website mentioned above.

 My says it’s important to note that repairing bad credit is a bit like losing weight. It takes time and there is no quick way to fix a credit score. In fact, out of all the ways to improve a credit score, quick-fix efforts are the most likely to backfire, so beware of any advice that claims to improve your credit scores fast.  The best advice for rebuilding credit is to manage it responsibly over time. If you haven’t done that, then you need to repair your credit history before you see credit score improvements.

 And, My says there are 3 important things you can do right now, (i) request a free copy of your credit report and check it for errors; (ii) set up payment reminders. Making your credit payments on time is one of the biggest contributing factors to your credit score, and (iii) reducing the amount of debt you owe.

You will find that less expensive loans are available from hard money lenders if your FICO Score is above  640. 

For over 25 years, AMI Lenders has been providing hard money loans to individuals in the Houston and surrounding areas who could not obtain a loan from a traditional lending source such as bank. 

Please give us a call today to discuss your commercial or residential hard money loan.

Topics: Hard Money, Hard Money Loans, hard money lenders


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