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How Credit Scores Impact Loans and Why Hard Money Lenders Don’t Care

Few people with rotten credit will get the funding they need through traditional methods. Arizona Hard Money Lenders are less concerned with your credit, so they may be a viable option if you’re getting bank denials.

Insufficient credit and low credit scores are involved in 36% and 26% percent of funding shortfalls, according to a recent Small Business Credit Survey put out by the 12 Federal Reserve Banks. Overall, about 77% of businesses do not get the funding they need, which creates a major gap in lending.

What’s more, 87% of small-business owners are using their personal credit scores to obtain financing, simply because their business scores are lacking, so it’s not that these people aren’t pursuing all avenues; they are. They’re even seeking loans from multiple sources at once; 48% try the large banks, 47% go for the small banks, and 24% give online lenders a try. Yet, credit risk holds people back time and time again, which is why Arizona Hard Money Lenders have become so popular.

But, to focus on the bank-dominated side of things again for just a moment, let’s say you’re an average person and the bank determines you have “medium credit risk.” To fit into this category, your business credit score would have to be 50-79 or your personal credit score would have to be 620-719. Your odds of getting fully funded are just 29% and there’s a 26% chance you won’t get any money at all.

What happens if you fall below this threshold? If, for example, your business score is 49 or less and your personal credit score is under 620, you’re considered “high risk.” Your odds of being fully funded drop down to 10% and there’s a 50% chance you will be totally denied any kind of funding.

Rotten Credit Kills Your Chances of Getting Traditional Funding

Even those with personal credit scores above 720 and business scores greater than 80 struggle. This is considered the “low risk” group, yet only 56% receive all the funding they need. Ultimately, there’s a gap in lending to begin with, and as your credit risk increases, that gap begins to look more like the Grand Canyon.

Your eligibility for loans can increase when you look into alternative funding sources.

One of the things that sets Arizona Hard Money Lenders apart is that they care less about your credit than banks do, so you can qualify even if your credit is shot or you don’t have the strongest track record. That’s because their loans are based on the value of an asset you own, such as a home. A lot of people in the fix-and-flip industry work with Arizona Hard Money Lenders and use the home they’re buying and repairing as collateral, then pay off the balance owed when they sell the home later. Sometimes people will also use their own home or other property as collateral too. Although these loans are not ideal for every situation, they can work well for many; particularly if you need a cash infusion for a short period of time and fit into one of the many groups underserved by banks.



Dennis Dahlber Broker Ri CEO Level 4 Funding LLC
Dennis Dahlberg

Broker/RI/CEO/MLO

Level 4 Funding LLC 
Hard Money Lender

Hard Money Loans

Hard Money Loan

Arizona Tel:  (623) 582-4444

Texas Tel:      (512) 516-1177

Dennis@level4funding.com

Dennis Dahlberg Broker/RI/CEO


NMLS 1057378 | AZMB 0923961 | MLO 1057378

22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027

111 Congress Ave | Austin | Texas | 78701  

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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