You can’t judge a book by it’s cover, and you can’t judge a person by their credit score. Unfortunately banks, lenders and other financial institutions do exactly that, often using credit score as a sole determining factor in deciding whether to grant a new loan. Another great reason to use private money for real estate investing is that it won’t negatively impact your credit score. Why not? Read on to find out.
When you borrow money from private individuals, something very important does NOT happen. They do not pull your credit report. Therefore, no inquiry shows up the next time someone DOES pull your credit report. Inquiries can lower your score, and multiple inquiries can have a negative impact on your score and your overall credit picture.
How much of an impact? That depends on who’s reading the credit report, and which of the three reports they’re reading.
One this is certain? all other factors being equal, it’s far better to not have inquiries show up on your report. When you use private money for real estate investing, you avoid the automatic ?inquiry deduction? in your score, as well as the negative assumptions loan officers often make when they see multiple inquiries.
There are plenty of great reasons to use private money for real estate investing, and one of the best is that private lenders don’t pull credit. Of course, that doesn’t mean you NEVER want to pull your own credit report in order to show it to a potential lender, or even invite him to pull it himself. That can be a good strategy, especially when you’re in the process of trying to earn a new lender’s trust.
Once the relationship is established and you’ve paid back a loan or two, they should never need to pull your report again? something no institutional lender I’ve ever worked with has been willing to guarantee. You can see that using private money for real estate investing has some real advantages, one of which is preserving your credit by limiting the number of inquiries on your report.
Why use private money for real estate investing? Plenty of reasons! For more try http://www.private-money-real-estate-investing.com/why-private-money.html
Tom Dunn is a successful real estate investor and author of the popular DealFiles Real Estate Investor Stories free newsletter. You are welcome to share this report, unedited and in it’s entirety, with anyone you like. You may not remove this text. ? 2007 by Tom Dunn.