Hard Money Lending: Do You Need a Certain Credit Score to Get a Loan?

Hard money loans are different to traditional mortgages because they are designed to be repaid typically in less than 18 months. If you’re a property developer or an investor who rehabilitates homes and then sells them for a profit, hard money lending could be right for you. But what are the eligibility criteria? Do you need a certain credit score to qualify?

Hard Money Lending: Do You Need a Certain Credit Score to Get a Loan?

An individual’s FICO score helps lenders to evaluate their creditworthiness. Around 90% of credit decisions are made using this system, so it’s highly likely that your hard money lender will check your score and base their decision on it. If you have a score above 740, you won’t have any trouble getting a loan, and you’ll benefit from excellent interest rates.

People with a score between 650 and 740 will also get a good rate, since they’re considered more financially responsible than average. Most hard money lenders accept people with lower scores because the loans are backed by property, but these borrowers might have to pay more interest. If you have a bad credit score or you don’t have a lot of credit history, reach out to us at Turning Point Lending to find out whether you’re still eligible.

What If I’ve Been in Financial Trouble In the Past?

People who have experienced bankruptcy, a foreclosure, or an IRS tax lien often have trouble getting funding because they are considered very risky borrowers. Even if you’ve resolved the issue and your financial situation is now much better, you might not be able to get a traditional mortgage.

Hard money lenders are often more flexible, and they might consider you despite your past issues. As long as you can demonstrate that you are financially stable and that you’ve taken measures to prevent further problems, you’ll be able to get a hard money loan.

How to Improve Your Credit Score

The lowest possible FICO score is 300, and the highest is 850. If your score is currently below 550, it’s unlikely that you’ll get approved for a hard money loan. You’ll have to take steps to improve your creditworthiness first. Start by always paying your bills and loan repayments on time. Set up direct debits to make this easier.

Credit bureaus also consider the ratio of money owed to credit available. Not using more than 30% of the credit that’s available to you shows lenders that you’re responsible. You might also be able to increase your score by having a good credit mix and not opening too many accounts at once, but each of these factors only makes up around 10% of your score.

What Are Some Other Considerations?

Your FICO score isn’t the only factor that determines whether you’re a good candidate for a hard money loan and what interest rate you’ll get. Your lender will also look at the property you are using to secure your loan, whether you already have some real estate experience, and how much cash you have available. If you’re interested in getting a loan, compile all your financial documents before reaching out to a lender.

Provide information about the property you’re buying and your past experience.  This information will help the lender to determine what kinds of loans you qualify for. Remember, you’ll only have to do this once. If you use the same lender for future projects, they’ll already have all your information on file.


Every hard money loan is backed by property, which the lender can collect if you fail to make repayments. At Turning Point Lending, we issue loans to people who would like to construct or renovate 1-4 family residential properties. Before providing you with a loan, we’ll check the documentation related to your property purchase. As long as you have the title to the property, you shouldn’t have any trouble getting approved.

Real Estate Experience 

Hard money lending companies generally prefer borrowers who already have some real estate experience. If you’ve fixed and flipped houses before, you already know how the process works, and you’re less likely to make mistakes. However, this doesn’t mean that beginners can’t apply. They might have to pay slightly more for their first loan, but over time, they’ll build up experience and become eligible for the best interest rates.

Available Cash 

Most lenders won’t provide you with 100% of the money you need to purchase your property. They might ask you to put down 10-20%, and they’ll fund the rest. It’s important to remember that this is a minimum requirement, and your chances of approval might be higher if you put down more than what the lender asks for. This demonstrates to them that you are in a good financial position and that you’re serious about your investment.

Do I Need Funding if I Have Cash?

If you have enough cash to fund 100% of your purchase plus the necessary renovations, you might wonder whether you need financing. In many cases, getting a loan is still a good idea. With a hard money loan, you’ll be able to purchase multiple properties at a time. As a result, you’ll complete more deals and reap much greater profits. People who have a lot of cash are generally considered safe borrowers, so they will get preferred interest rates.

Why Use a Hard Money Loan? 

Unlike traditional mortgages, hard money loans are ideal for short-term property investors. Although the interest rate is higher, you’ll hold your debt for a much shorter period of time, so you’ll pay very little overall. If you’re fixing and flipping a property, there are hard money loans that can cover the cost of renovations.

Another major advantage is that the approval process is quicker and simpler because the loan is backed by property, so the lender isn’t taking on a lot of risk. People who aren’t eligible for traditional financing options can get on the property ladder by taking out a hard money loan.

Why Turning Point Lending?

There are many lenders in your local area, so why should you choose Turning Point Lending? We are unique because our founders, Jim Dougherty and Scott Thomas, have been real estate investors for close to 20 years.  Like you, we’re investors, so we understand the unique needs of people in your position. To help everyone access the loans they need, we’ve developed several market-leading options.

There are fix-and-flip loans for people who’d like to renovate a property and sell it, fix-and-hold loans for people building a rental portfolio, as-is bridge loans for properties, and new construction loans for developers. We build up long-term relationships with most of our borrowers. Once you’ve completed your initial application, you can keep coming back to us whenever you’re ready for a new project.

Most hard money lenders require you to have a certain credit score before issuing you a loan. When determining what interest rate to offer you, they will consider your financial stability, whether you have any real estate experience, and how much cash you have available to you. Get in touch with us at Turning Point Lending to find out more about hard money lending and how it could help you grow your real estate business.