Invest with Bad Credit

Investing in Real Estate with Bad Credit

For the most part, taking a loan or receiving financing seems almost exclusively reliant on your credit score. For some, having bad credit is holding them back from investing in real estate, but should it be? Let’s explore investing in real estate with bad credit.

What Affects Your Credit 

No one plans to have a poor credit score. It is often something that happens due to a sudden incident or a build up of debt. 

Some of the reasonings include:

  • Missing credit card payments 
  • Missing bill payments
  • Student debt 
  • Medical bills 
  • Overspending with your credit card
  • And more 

“Bad” Credit 

The number that designates “bad” credit is debated. If you see many of the visual scales for credit, often scores under 650 fall into the orange or red category. However, FICO assesses a score ranging from 580-669 to be “Fair” and anything 579 and below to be “Poor”. Not to worry if your credit is not where you want it to be there are still many loan options that one can qualify for with a credit score within the 500s. 

Loan Options for Lower Credit

There are a few government-backed loans that you can qualify for with lower credit. In the real estate investment world, these loans are often used when looking to House Hack”. The first being an FHA Loan, often used by first-time home buyers, offers 3.5% down with a credit score of 580 and above or a 10% down-payment for a credit score as low as 500. VA Loan (for Veterans) and USDA Lenders also accept credit scores down to 580. There are a few other, more niche, government-backed loan products that accept lower credit scores – contact LenderFi.co to speak with a loan officer about these financing products. 

Another loan option is a Non-QM Loan. Non-QM Loans are loans that sit outside the criteria of the Federal Government and the Consumer Financial Protection Bureau (CFPB). There are many loan options that are considered “Non-QM”, including a 12-Month Bank Statement Loan and Asset Only Loans, which accepts credit scores from the low 600s. Contact LenderFi.co to speak with a loan officer that will be able to point you in the right direction. 

Another method may be saving up for a larger down-payment. When talking with a LenderFi.co loan officer, they may be able to find a loan product that will accept your credit score, but with a higher down-payment. Being equipped with the funds to do so in that scenario may be a more attractive option. 

Work Towards Fixing Your Credit 

Though it may not be the option you want to hear or go with, it sometimes will be in your best interest to repair your credit and then come back to the table looking for financing. 

Ways to fix your credit:

  • Lower your debt-balance. Having a high debt-to-limit ratio will greatly impact your credit and minimizing this ratio to have the least amount of your limit used, will aid in bringing your score back up.
  • Stop Applying for Credit – Everytime you apply for credit, your credit score takes a hit. 
  • Other – Usually, you know the reasons behind your credit score going lower, and if you don’t, there are many websites and applications that you can sign up for that will show and tell you. Figuring this out and then doing your own research can give you more specific remedies. 

All in All…

It is not impossible to invest in real estate with bad credit – there are actually numerous methods! Don’t let your credit hold you back, speaking with a LenderFi.co loan officer will allow you to see your options and the best plan of action for your scenario!

Call us at (800)-826-5077 or email at info@lenderfi.co

How do I qualify?

LenderFi.co is your one-stop-shop to help you with financing!

Click to see if you qualify!

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Ryan Thaler

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We provides superior asset-backed investment solutions for individuals, institutional clients, family trusts and our own syndication/development partners.

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