How important is credit scoring when getting started?

[Melissa Howell]

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? 

[Khemraj Sarju Jr.]

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. 

[River Sava]

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

[Nate Monson]

Hi @Melissa 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. 

[Melissa Howell]

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

[Nate Monson]

Correct, you may be able to find commercial lending under 5 units but residential loans wont fund anything higher than 4 units.

[Kerry Noble Jr]

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..... 

[Hamed Rahimi]

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.

[Melissa Howell]

Thanks Hamed, that was good info to know.

[Melissa Howell]

Quote from @Kerry Noble Jr:

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..... 

Well, I haven't decide. I'm still getting more info since I am a newbie to investments and I don't wanna bit off mare than I can choose.  I would like to purchase a 6-8 unit apartment complex using the USDA loan for SFL. My plan is to evidently use the 1031 towards another multi use complex. I am hoping that could be done.

[Melissa Howell]

Quote from @Nate Monson:

Hi @Melissa 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. 

 I would like to do commercial and I am searching for perhaps a 6 - 8 unit but I don't wanna feel over whelmed since I'm new to investment. I managed a non for profit organizations 8 unit complex for about five years therefore, I have experience. I'm still educating myself on how to proceed. 

[Melissa Howell]

Thanks, good to know.

[Melissa Howell]

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.

[Trevor Naumann]

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.

[Taylor Dasch]

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. 

[Melissa Howell]

Quote from @Melissa Howell:

Quote from @Kerry Noble Jr:

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..... 

Well, I haven't decide. I'm still getting more info since I am a newbie to investments and I don't wanna bit off more than I can chew.  I would like to purchase a 6-8 unit apartment complex using the USDA loan for SFL. My plan is to evidently use the 1031 towards another multi use complex. I am hoping that could be done.