Hard Money Loans, Low Credit Scores, and Some Answers for Both

Posted by Brent on August 23, 2021

There’s a significant lack of preparation in school regarding financial matters. The curriculum of many classes would benefit from lessons on balancing a checkbook, maintaining an adequate credit score, and learning how a mortgage works. While these topics might have been absent during your schooling, that doesn’t mean that you should remain unaware of them. At AHL Hard Money, we’re here to help.

One of the factors that discourage people from believing that home ownership is possible all comes down to a low credit score. While it’s sometimes believed that a low score translates into financial irresponsibility and living below the poverty line, this is an inaccurate misconception. Low credit scores and hard money loans are two topics that come up when discussing the purchase of a house. So here are some common questions and sought-after answers. 

What is a credit score and how does it work? 

Your credit score is what financial institutions such as banks look at when considering you for a loan. Your score can increase and decrease depending on how reliable you are with payments. Other factors that can affect your credit rating are debt accumulated over time, the number of open accounts, and if you pay your bills on time. The most common of these is what’s known as a FICO score, which operates on a three-digit scale. 

If you’re unsure of what your score is, there are plenty of agencies that monitor FICO scores and can give you a detailed history. 

My credit score is low and I need a loan to buy a house. What should I do? 

While having a low credit score can sometimes be a handicap in the financial world—it doesn’t necessarily mean there aren’t options available. One option is what’s known as a hard money loan. A hard money loan isn’t based on your current FICO score, but instead on the asset you wish to purchase. By operating outside of the typical banking platform, a short-term hard money loan is an ideal choice for buyers with less than favorable credit. 

Is a hard money loan just for people with low credit scores? 

Not at all. Sometimes a low credit history doesn’t come from past financial mistakes, but not establishing a line of credit early on. There are also people who are self-employed, and while they might be in a good place financially, their credit score might not reflect this. A hard money loan is not a reflection of your wealth or social standing, it’s merely an alternative method of obtaining the home you’ve had your eye on. 

AHL Hard Money Network isn’t exclusive and our interest is in helping you. We serve all of Florida, from the panhandle to Palm Beach. If you’ve ever wanted a house to call your own, this is the chance to make it happen. Visit our website at our website for a free consultation and information on the different services we have to offer you. If you have a question and wish to speak to us directly, please call 813-516-5210.

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