How Hard Money Loans Can Improve Your Credit
Jun 07, 2016
The first thing that a person needs to know about commercial hard money loans is that their criteria do not focus on the credit histories of the borrowers. This means that although these loans include some major drawbacks, such as high interest rates and low loan-to-value ratios, they are great options for the people with bad credit histories. But, besides the fact that these loans provide borrowers with the money they need in order to complete specific tasks, they allow them to improve their FICO credit scores.
How Does a Hard Money Loan Improve Credit?
Before finding out how to use an asset based loan to repair credit scores, potential borrowers must make sure that they can comply with the terms and conditions of this loan. If a person is able to pay off the loan by the due date, he or she can definitely use it in order to improve his or her credit score. The following lines show how commercial hard money lenders can help debtors improve their credit histories.
- Flexible Agreements: These loans come along with more flexible agreements compared to the traditional mortgage loans. This means that lenders are able to adjust the terms and conditions of a hard money loan in order to help a borrower to repay it on time and improve his or her FICO scores.
- Extendable Payment Terms: Due to the current economic situation, more and more people are searching for loans that provide extendable payment terms. These loans allow lenders to extend the loan repayment term up to three years. But, if a creditor offers an initial term of three years, he or she cannot extend it.
- Debt Consolidation: Commercial hard money lenders usually allow people to refinance existing debts. This can definitely help a debtor to improve his or her FICO score.
Although many specialists affirm that hard money loans have nothing to do with credit histories, since they are provided by individual lenders, some lending services choose to report to the credit agencies. This means that most borrowers have great chances to improve their credit scores if they succeed to pay off these loans on time.