Do hard money loans affect credit score?
Hard money loans are a type of financing that is secured by real estate, typically used as a short-term loan for flipping houses or rehabilitating properties. These loans are often characterized by higher interest rates and shorter repayment periods than traditional mortgages.
The impact of a hard money loan on your credit score will depend on whether or not you make your payments on time. If you make all of your payments on time, the loan may have a positive impact on your credit score. However, if you miss payments or default on the loan, it can have a negative impact on your credit score.
It's important to note that hard money loans are not typically reported to the major credit bureaus, so they may not have as much of an impact on your credit score as traditional loans. However, if you default on the loan and the lender takes legal action to collect the debt, that could be reported to the credit bureaus and could affect your credit score.
If you are considering taking out a hard money loan, it's a good idea to carefully consider the terms of the loan and make sure you will be able to make the required payments on time. It's also a good idea to review your credit report regularly to make sure it is accurate and to identify any potential issues that may need to be addressed.