How important is credit scoring when getting started?

Question

Hi everyone, I am so glad to be apart of this group. It is my goal to build my own personal empire for myself and children. I am a single mom that always wanted to get into investing but was not sure how to start. I have been paying down my bills (2 Credit cards, Student loan and auto loan) and I am current . Do I need a credit score of a certain threshold to start investing?

Nate Monson · Answer

Hi @Melissa Reshaun Howell If you're looking to use a 30 year conventional loan for your first investment your credit score will be looked at by the banks underwriters. So if you were looking to house hack for example your credit score would probably be looked at.

If you're using commercial lending or hard/private money to do a rehab to hold or flip this is a scenario where your credit score likely would not come into play. These type of lenders are more concerned with the performance of the deal and the experience of the investor rather than your personal financial picture.

River Sava · Answer

Hi Melissa- For certain lenders credit is very important when determining rates...higher the better

Taylor Dasch · Answer

It seems like the more that I get into this, the less the credit score actually matters. I am trying to improve mine though, because it is ideal to get your properties into a stable, long term loan. It is not as big of a stressor to me as it was the last 6 months.

Trevor Naumann · Answer

Credit Matters.... But not so much that you shouldn't get started. The sooner you get started the sooner you will get to your goals.

Hamed Rahimi · Answer

The credit score is definitely important. Every Lender has a minimum score requirement. You mentioned that you are paying down your debts. Note that debt to income ratio is important. Usually, lenders want you to have about 40% or less debt-to-income ratio.

Khemraj Sarju Jr. · Answer

A great deal. This can determine not only rates but LTVs on what the banks will offer you for purchase or refinance. We do offer programs for low credit scores as well. In most cases, clients think their credit scores are low, but in reality they are doing great and can still qualify for great rate and terms.

Melissa Howell · Answer

Thanks for the heads up. To my understanding is that commercial is anything above 4 unit's, correct?

Kerry Noble Jr · Answer

It depends on what your strategy is.....if youre wholesaling then you dont need it but you can build it while youre wholesaling. Start working on it now and keep at it.......it takes time.....

Melissa Howell · Answer

I'm still trying to grasp the concept of wholesaling. It seem like there is a great deal of misinformation and I don't trust going that route as of yet. I'm still researching on that.

How important is credit scoring when getting started?

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