Key Takeaways

  • Property Value, Not Credit Score: Hard money loans are approved primarily based on the property’s value, not your personal creditworthiness. ABL works with borrowers with FICO scores as low as 660. 
  • Strong Deal = Better Odds: A viable property with strong return potential, a solid business plan, clear comps, and a defined exit strategy can help offset a poor credit history.
  • Come Prepared: Showing proof of funds for a down payment (at least 20%), cash reserves, and any prior real estate experience strengthens your application. 
  • Be Transparent: Don’t hide a low credit score. Explain the circumstances and your plan to improve. Lenders appreciate honesty. 
  • Fast Turnaround: ABL can pre-qualify you within 24 hours and fund your project in as few as 10 days from application to close. 

Bad credit doesn’t have to stand between you and your next real estate deal. With a hard money loan, you can get fast, flexible financing based on the property’s value, not just your personal creditworthiness. 

Over the last 15+ years, ABL has funded over 9,000 real estate projects nationwide. Whether you’re a first-time investor or a seasoned pro, we may have a hard money loan program for you.

What Is a Hard Money Loan?

In real estate, a hard money loan is a short-term loan secured by property. Unlike conventional mortgages, hard money loans are approved based mainly on the value of the property being used as collateral. Your credit score, income, and debt may still play a role, but they’re not as important as the value of the property itself. 

Most hard money loans are issued by private lenders for specific purposes. For example, ABL offers hard money loans for fix-and-flip and new construction projects. We also offer them as a temporary bridge loan to help you buy a property quickly while you secure permanent financing.

What Credit Score Do You Need to Get a Hard Money Loan

Minimum credit score requirements for hard money loans vary by lender, project, and market. However, ABL offers hard money loans to borrowers with FICO scores as low as 660. 

Our goal is to help your investment succeed by ensuring, first and foremost, that it has enough return potential. If it does, we’re happy to explore partnering with you to supply funding.

How to Get a Hard Money Loan With Poor Credit

Let’s say you have a poor credit score. Are you simply out of luck? 

The answer is no. You may still qualify for a hard money loan if you play your cards right. Start with the following:

1. Find a Viable Property with Strong Return Potential

Search for distressed properties that you can buy at a discount and sell for more. The lower a home’s purchase price, the higher your potential returns. 

2. Prepare a Solid Business Plan

Write up a detailed investment strategy with realistic timelines and profit projections. This helps lenders better understand your project.

3. Demonstrate the After-Repair Value (ARV)

Provide recent sales prices for similar properties nearby (aka “comps”) and renovation cost estimates. This can help establish the property’s after-repair value projections. 

4. Show Proof of Funds for Down Payment and Reserves

Most hard money lenders require you to put down at least 20%, plus cash reserves to cover unexpected costs. The more funds you have, the less risk you pose to lenders.

5. Highlight Any Real Estate Experience

You can help offset bad credit by showing you’ve completed successful projects in the past or are partnering with another investor who has. 

6. Have a Clear Exit Strategy

Provide the lender with a clear exit strategy, whether that’s a sale or a refinance, to reassure them about how you’ll repay the loan.

7. Be Transparent About Your Credit Situation

Finally, don’t hide your low credit score. Instead, explain what caused it and how you plan to improve your credit moving forward. 

How to Improve Your Credit Score

Of course, there may be no way around a credit score that’s too low. In these cases, the best approach is to improve it so you qualify for a loan. Here’s how:

Make On-Time Payments

Your debt payment history makes up 35% of your credit score, so make sure you always pay on time. Consider setting up automated withdrawals so you don’t have to think about it.

Pay Down Debt Balances

The lower your total debt (and credit utilization rate), the more your credit score tends to rise because it shows you know how to use credit responsibly.

Keep Your Oldest Account Open

Part of your credit score is determined by your credit history length. By closing your oldest account, you effectively shorten that history, so keep the account open, even if you don’t use it. 

Diversify the Types of Credit You Have

Credit mix is another small credit score factor. Try to diversify the types of credit you have (e.g., credit card, installment loans, etc.) without taking on unnecessary debt.

Don’t Apply for New Credit

Every time you apply for credit, it slightly lowers your credit score. While the impact is small and temporary, it’s worth remembering when you’re trying to qualify for a new loan.

Dispute Any Mistakes on Your Credit Report

Request a free copy of your credit report from the three major credit bureaus at www.annualcreditreport.com. Look for any mistakes and request a correction if you see one.

What to Expect When You Apply for a Hard Money Loan

Assuming you’re ready to apply for a hard money loan, here’s what to expect:

First, the lender will evaluate your application by reviewing the proposed project, the subject property’s value, and your experience. Once the loan is approved, they’ll offer loan terms for you to review, including an interest rate and repayment schedule. 

From there, you may need to provide some additional documents before moving on to closing, so you can receive your loan funds. At ABL, this entire process can take as few as 10 days from start to finish, depending on the complexity of the project. 

See If You Pre-Qualify for a Hard Money Loan From ABL

Ready to take the first step? Before applying for a hard money loan, you can pre-qualify to see if your project meets a lender’s basic requirements. At ABL, we can pre-qualify you for a hard money loan within 24 hours. All it takes is sharing a few details about you and the project. One of our local experts will then reach out to you to let you know if we’re a good fit! Pre-qualify today!

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Real Reviews from Real Borrowers

 

Great experience! They always answered or returned my calls immediately and walked me through the entire process and made sure all my questions were answered. I had a couple of questions weeks after my loan closed and they still responded immediately and made sure I was taken care of. Great experience and I would highly recommend ABL.

Cindy G.

I am glad I got to know Asset Based Lending, they made funding for my construction site very simple. They have a great team of people, that would go out of their way to help. Boris has been great and very helpful, I highly recommend them for all your Construction financing needs.

Mike A.

I have had the pleasure of working with Boris Akbashev for my real estate financing needs on my last 10-15 projects, and I cannot speak highly enough of his professionalism and expertise. Boris demonstrated a deep understanding of the lending process and went above and beyond to ensure I secured the best possible terms.

John S.

Truly a pleasure having ABL on every deal! Thanks to their lending expertise and timely support and guidance throughout the process to get the best loan for my deals. I can see my company growth from 1-2 flips to numerous flips, new construction, and DSCR loan to grow my portfolio.

Pedro E.

Asset Based Lending is the place to shop for all your construction needs. Their easy funding policy, makes life so much simpler for any builder to focus on building and not be worried about financing project. Boris was supper helpful to accommodate me with all me financing needs.

Ray P.