Basics: Credit

Conventional and sub prime lenders rely on a credit grade system or “FICO” score.

The FICO system is a complex matrix measuring over 30 different variables in an individual’s credit profile. The FICO system converts the profile into a numeric score, which is added to an individual’s credit report. That score is a reflection of the computer assigned credit risk for that individual. The intent is to reduce the amount of subjectivity underwriters (credit decision makers) inject into the risk analysis process.

Borrowers with a score below 720 usually find themselves locked out of the best loan rates and terms offered. Typically, borrowers with a score below 500 are locked out of the Conventional and sub prime market altogether.

Unlike conventional and sub prime lenders, Hard Money Lenders rely on the equity position in the property to guide their credit decisions.

 

What is Hard Money?
History
General Use
Credit
Qualifying
Typical Loan Scenarios
Considerations
Rates, Terms, Points & Fees
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