Why do some investors care if DSCR loans are reported on credit?
Erik EstradaBusiness Member
Lender · Member since 2022 · 6k+ posts · 1k+ votes
LuxePrivate Investments LLC 570 Reviews
Why do some investors care if DSCR loans are reported on credit?
Most Popular Reply
Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes
1yLots of bad AI answers in this thread. Whether or not a DSCR loan reports on your personal credit has nothing to do with DTI. Whether it impacts your DTI depends on two variables - whether or not you PG the loan (you will have to in most cases), and the guidelines of the loan program you are qualifying for. If you are getting a Conforming, VA, or FHA loan, it's going to have an impact on your DTI, no matter what happens on your credit report.
When this topic comes up in conversations with my borrowers, 90% of the time it's because they mistakenly think that it won't affect their DTI for future loans if it's not reporting.
14 Replies
- 1yFrankie VozziBusiness MemberMember since 2025 · 392 posts · 98 votes
Great question Erik. With DSCR loans, most investors worry about credit checks because they don't want anything showing up on their personal reports. The good news is: even though lenders check credit for pricing and risk, the loan itself doesn’t report to your personal credit when it's done under an LLC or investment entity. So you still keep your personal credit clean and free for other uses, while getting a solid rate and quick close.
Curious, have you seen any lenders start reporting DSCRs differently this year?
- 1yWilliam ThompsonBusiness MemberAccountant · Williamstown, NJ · Member since 2025 · 341 posts · 182 votes
Quote from @Erik Estrada:
I have always been curious about why some investors care if a DSCR loan is reported on your personal credit?
Good question — that one comes up a lot.
The main reason some investors prefer DSCR loans not to report to personal credit is flexibility. When it's off your report, it doesn't impact your DTI ratio, which keeps your borrowing power open for future deals or personal financing.
That said, having it report can sometimes help build your credit history if you’re still early in your investing journey — so it really depends on your long-term strategy.
Are you currently using DSCR loans in your portfolio, or still exploring if they fit your goals?
RE Accounting and Tax Professionals LLC521 Reviews- Lender · Member since 2022 · 6k+ posts · 1k+ votes1y
Quote from @William Thompson:
Quote from @Erik Estrada:
I have always been curious about why some investors care if a DSCR loan is reported on your personal credit?
Good question — that one comes up a lot.
The main reason some investors prefer DSCR loans not to report to personal credit is flexibility. When it's off your report, it doesn't impact your DTI ratio, which keeps your borrowing power open for future deals or personal financing.
That said, having it report can sometimes help build your credit history if you’re still early in your investing journey — so it really depends on your long-term strategy.
Are you currently using DSCR loans in your portfolio, or still exploring if they fit your goals?
I am curious to know how this does not affect your personal credit? The borrower signs a personal guarantee at closing. Additionally if the investor is reporting rental income and depreciating the asset on his income tax returns, wouldn't it be fairly easy to check via a title search to see that there is a mortgage recorded?
LuxePrivate Investments LLC 570 Reviews - 1yWilliam ThompsonBusiness MemberAccountant · Williamstown, NJ · Member since 2025 · 341 posts · 182 votes
Quote from @Erik Estrada:
Quote from @William Thompson:
Quote from @Erik Estrada:
I have always been curious about why some investors care if a DSCR loan is reported on your personal credit?
Good question — that one comes up a lot.
The main reason some investors prefer DSCR loans not to report to personal credit is flexibility. When it's off your report, it doesn't impact your DTI ratio, which keeps your borrowing power open for future deals or personal financing.
That said, having it report can sometimes help build your credit history if you’re still early in your investing journey — so it really depends on your long-term strategy.
Are you currently using DSCR loans in your portfolio, or still exploring if they fit your goals?
I am curious to know how this does not affect your personal credit? The borrower signs a personal guarantee at closing. Additionally if the investor is reporting rental income and depreciating the asset on his income tax returns, wouldn't it be fairly easy to check via a title search to see that there is a mortgage recorded?
That’s a great question — and you’re absolutely right to dig deeper on that.
With most DSCR loans, the key difference is that while you sign a personal guarantee, the loan itself is typically made under an entity (LLC) and isn’t reported to the consumer credit bureaus unless it defaults. It’s still legally binding, but it won’t show up on your personal credit report the way a conventional loan would.
As for the title and tax side — yes, anyone can verify a mortgage through public records or tax filings, but that doesn’t automatically tie back to your personal credit profile. The IRS and credit bureaus don’t share that kind of direct reporting link.
It’s one of those “behind-the-scenes” structuring advantages that can help investors scale — as long as it’s done right.
RE Accounting and Tax Professionals LLC521 Reviews - Lender · Member since 2022 · 6k+ posts · 1k+ votes1y
Quote from @William Thompson:
Quote from @Erik Estrada:
Quote from @William Thompson:
Quote from @Erik Estrada:
I have always been curious about why some investors care if a DSCR loan is reported on your personal credit?
Good question — that one comes up a lot.
The main reason some investors prefer DSCR loans not to report to personal credit is flexibility. When it's off your report, it doesn't impact your DTI ratio, which keeps your borrowing power open for future deals or personal financing.
That said, having it report can sometimes help build your credit history if you’re still early in your investing journey — so it really depends on your long-term strategy.
Are you currently using DSCR loans in your portfolio, or still exploring if they fit your goals?
I am curious to know how this does not affect your personal credit? The borrower signs a personal guarantee at closing. Additionally if the investor is reporting rental income and depreciating the asset on his income tax returns, wouldn't it be fairly easy to check via a title search to see that there is a mortgage recorded?
That’s a great question — and you’re absolutely right to dig deeper on that.
With most DSCR loans, the key difference is that while you sign a personal guarantee, the loan itself is typically made under an entity (LLC) and isn’t reported to the consumer credit bureaus unless it defaults. It’s still legally binding, but it won’t show up on your personal credit report the way a conventional loan would.
As for the title and tax side — yes, anyone can verify a mortgage through public records or tax filings, but that doesn’t automatically tie back to your personal credit profile. The IRS and credit bureaus don’t share that kind of direct reporting link.
It’s one of those “behind-the-scenes” structuring advantages that can help investors scale — as long as it’s done right.
Which DSCR lenders allow the loan to be made under an LLC?
If it is legally binding, wouldn't a conventional lender request a repayment history schedule and request the mortgage note of the property? Is the note made to the LLC or to the person?
LuxePrivate Investments LLC 570 Reviews Quote from @William Thompson:
Quote from @Erik Estrada:
Quote from @William Thompson:
Quote from @Erik Estrada:
I have always been curious about why some investors care if a DSCR loan is reported on your personal credit?
Good question — that one comes up a lot.
The main reason some investors prefer DSCR loans not to report to personal credit is flexibility. When it's off your report, it doesn't impact your DTI ratio, which keeps your borrowing power open for future deals or personal financing.
That said, having it report can sometimes help build your credit history if you’re still early in your investing journey — so it really depends on your long-term strategy.
Are you currently using DSCR loans in your portfolio, or still exploring if they fit your goals?
I am curious to know how this does not affect your personal credit? The borrower signs a personal guarantee at closing. Additionally if the investor is reporting rental income and depreciating the asset on his income tax returns, wouldn't it be fairly easy to check via a title search to see that there is a mortgage recorded?
That’s a great question — and you’re absolutely right to dig deeper on that.
With most DSCR loans, the key difference is that while you sign a personal guarantee, the loan itself is typically made under an entity (LLC) and isn’t reported to the consumer credit bureaus unless it defaults. It’s still legally binding, but it won’t show up on your personal credit report the way a conventional loan would.
As for the title and tax side — yes, anyone can verify a mortgage through public records or tax filings, but that doesn’t automatically tie back to your personal credit profile. The IRS and credit bureaus don’t share that kind of direct reporting link.
It’s one of those “behind-the-scenes” structuring advantages that can help investors scale — as long as it’s done right.
AI has a hard time picking up on these types of underwritng issues. Just fyi.
Hurst Real Estate, INC4.986 Reviews
- 1yWilliam ThompsonBusiness MemberAccountant · Williamstown, NJ · Member since 2025 · 341 posts · 182 votes
Jay, Totally fair point — you’re right that underwriting can vary a lot from lender to lender. My comment was meant to explain how DSCRs are typically structured on paper, but you’re absolutely right that some underwriters still treat PG-backed loans as contingent liabilities in practice.
RE Accounting and Tax Professionals LLC521 Reviews - Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes1y
Lots of bad AI answers in this thread. Whether or not a DSCR loan reports on your personal credit has nothing to do with DTI. Whether it impacts your DTI depends on two variables - whether or not you PG the loan (you will have to in most cases), and the guidelines of the loan program you are qualifying for. If you are getting a Conforming, VA, or FHA loan, it's going to have an impact on your DTI, no matter what happens on your credit report.
When this topic comes up in conversations with my borrowers, 90% of the time it's because they mistakenly think that it won't affect their DTI for future loans if it's not reporting.
This is my favourite selling point that non licensed brokers use to trick borrowers into thinking that the DSCR loan is some magical loan that has zero consequence. It just BS, but borrowers believe it.
Hurst Real Estate, INC4.986 ReviewsThere are two main reasons why not reporting to credit is a big advantage:
- If it doesn't show on your credit, it may not affect your ability to get DTI-based loans. This doesn't necessarily mean conventional loans, but there are bank statement loans, HELOCs, and other loan products out there that will only hit your DTI if it shows up in your credit report, regardless of whether you personally guarantee the loan.
- The more properties and loans that report to your credit, the more chances you have of something going wrong and affecting your credit. I know plenty of great borrowers who, by no fault of their own, have a late payment show up on their credit because their ACH failed to pull and they didn’t catch it in time. But not having these loans report to your credit, it’s much easier to maintain your credit.
Quote from @Nghi Le:
There are two main reasons why not reporting to credit is a big advantage:
- If it doesn't show on your credit, it may not affect your ability to get DTI-based loans. This doesn't necessarily mean conventional loans, but there are bank statement loans, HELOCs, and other loan products out there that will only hit your DTI if it shows up in your credit report, regardless of whether you personally guarantee the loan.
- The more properties and loans that report to your credit, the more chances you have of something going wrong and affecting your credit. I know plenty of great borrowers who, by no fault of their own, have a late payment show up on their credit because their ACH failed to pull and they didn’t catch it in time. But not having these loans report to your credit, it’s much easier to maintain your credit.
and do those applications not ask you to disclose all loans? and are they not pulling anti fraud reports from corelogic/lexesnexus etc and find the loans even if the docs required for underwriting do not show them? and the answer to both is of course. I am a balance sheet lender and when I lend my funds to a borrower I do not pay to report to the credit agencies but does that means absolutely nothing.
Hurst Real Estate, INC4.986 ReviewsQuote from @Jay Hurst:
Quote from @Nghi Le:
There are two main reasons why not reporting to credit is a big advantage:
- If it doesn't show on your credit, it may not affect your ability to get DTI-based loans. This doesn't necessarily mean conventional loans, but there are bank statement loans, HELOCs, and other loan products out there that will only hit your DTI if it shows up in your credit report, regardless of whether you personally guarantee the loan.
- The more properties and loans that report to your credit, the more chances you have of something going wrong and affecting your credit. I know plenty of great borrowers who, by no fault of their own, have a late payment show up on their credit because their ACH failed to pull and they didn’t catch it in time. But not having these loans report to your credit, it’s much easier to maintain your credit.
and do those applications not ask you to disclose all loans? and are they not pulling anti fraud reports from corelogic/lexesnexus etc and find the loans even if the docs required for underwriting do not show them? and the answer to both is of course. I am a balance sheet lender and when I lend my funds to a borrower I do not pay to report to the credit agencies but does that means absolutely nothing.
They have simplified applications (and oftentimes don't accept a 1003), and they are still pulling background checks via OFAC, LexisNexis, etc. Sometimes those applications don't even give you a way to disclose your loans (even if you wanted to), especially the fully digital platforms. There are lenders out there who calculate DTI in community property states by taking the debts of one spouse and counting the incomes of both spouses... which probably makes as much sense to me as the no-income loans that have started popping up again.
But I do love the Non-QM and private lending world as there seems to be a product for everything and everybody underwrites differently. Over the past couple years, I've seen a few surprises such as HELOCs behind HELOCs (and in 3rd lien position) and 2nd lien hard money without any credit pulls (and I know some of these folks have sub-400 credit scores). But when they are more lax in one area, they tend to be tighter in others, such as capping out at 60% LTV or rejecting a borrower who has done dozens of loans elsewhere because of a marijuana felony on their background check from 30 years ago in a state that has legalized it.
But back to the original question... yes I agree with everyone that most DTI-based lenders will still count the DSCR debt against you, regardless of whether or not it reports to your credit. But honestly you just need to plan for things ahead of time. If you're a married couple and one spouse doesn't work, have the non-working spouse take sole title to the property and get the DSCR loan (regardless of whether it reports on credit or not). Then you won't have to worry about it affecting the DTI of the spouse that has income and wants to qualify for conventional loans; note that this doesn't work for FHA and VA loans in community property since you would need to include non-borrowing spousal debt.
Quote from @Nghi Le:
Quote from @Jay Hurst:
Quote from @Nghi Le:
There are two main reasons why not reporting to credit is a big advantage:
- If it doesn't show on your credit, it may not affect your ability to get DTI-based loans. This doesn't necessarily mean conventional loans, but there are bank statement loans, HELOCs, and other loan products out there that will only hit your DTI if it shows up in your credit report, regardless of whether you personally guarantee the loan.
- The more properties and loans that report to your credit, the more chances you have of something going wrong and affecting your credit. I know plenty of great borrowers who, by no fault of their own, have a late payment show up on their credit because their ACH failed to pull and they didn’t catch it in time. But not having these loans report to your credit, it’s much easier to maintain your credit.
and do those applications not ask you to disclose all loans? and are they not pulling anti fraud reports from corelogic/lexesnexus etc and find the loans even if the docs required for underwriting do not show them? and the answer to both is of course. I am a balance sheet lender and when I lend my funds to a borrower I do not pay to report to the credit agencies but does that means absolutely nothing.
They have simplified applications (and oftentimes don't accept a 1003), and they are still pulling background checks via OFAC, LexisNexis, etc. Sometimes those applications don't even give you a way to disclose your loans (even if you wanted to), especially the fully digital platforms. There are lenders out there who calculate DTI in community property states by taking the debts of one spouse and counting the incomes of both spouses... which probably makes as much sense to me as the no-income loans that have started popping up again.
But I do love the Non-QM and private lending world as there seems to be a product for everything and everybody underwrites differently. Over the past couple years, I've seen a few surprises such as HELOCs behind HELOCs (and in 3rd lien position) and 2nd lien hard money without any credit pulls (and I know some of these folks have sub-400 credit scores). But when they are more lax in one area, they tend to be tighter in others, such as capping out at 60% LTV or rejecting a borrower who has done dozens of loans elsewhere because of a marijuana felony on their background check from 30 years ago in a state that has legalized it.
But back to the original question... yes I agree with everyone that most DTI-based lenders will still count the DSCR debt against you, regardless of whether or not it reports to your credit. But honestly you just need to plan for things ahead of time. If you're a married couple and one spouse doesn't work, have the non-working spouse take sole title to the property and get the DSCR loan (regardless of whether it reports on credit or not). Then you won't have to worry about it affecting the DTI of the spouse that has income and wants to qualify for conventional loans; note that this doesn't work for FHA and VA loans in community property since you would need to include non-borrowing spousal debt.
When the average investor from bigger pockets tells me that lender A will not report the debt to their credit report and I ask them why that matters they do not say so I can get a 3rd postion HELOC. It is because they do not want the debt counted against them when they go to buy a primary home. (which never makes much sense anyway because the rent can be used to offset at least the majority of the payment anyway) As you know, full doc loans even bank statement loans are going to hold that debt against you no matter if on the credit report or not, and it is also fraud not to disclose it. So, as a lending community here we really need to be honest with our borrowers.
Hurst Real Estate, INC4.986 ReviewsQuote from @Jay Hurst:
Quote from @Nghi Le:
Quote from @Jay Hurst:
Quote from @Nghi Le:
There are two main reasons why not reporting to credit is a big advantage:
- If it doesn't show on your credit, it may not affect your ability to get DTI-based loans. This doesn't necessarily mean conventional loans, but there are bank statement loans, HELOCs, and other loan products out there that will only hit your DTI if it shows up in your credit report, regardless of whether you personally guarantee the loan.
- The more properties and loans that report to your credit, the more chances you have of something going wrong and affecting your credit. I know plenty of great borrowers who, by no fault of their own, have a late payment show up on their credit because their ACH failed to pull and they didn’t catch it in time. But not having these loans report to your credit, it’s much easier to maintain your credit.
and do those applications not ask you to disclose all loans? and are they not pulling anti fraud reports from corelogic/lexesnexus etc and find the loans even if the docs required for underwriting do not show them? and the answer to both is of course. I am a balance sheet lender and when I lend my funds to a borrower I do not pay to report to the credit agencies but does that means absolutely nothing.
They have simplified applications (and oftentimes don't accept a 1003), and they are still pulling background checks via OFAC, LexisNexis, etc. Sometimes those applications don't even give you a way to disclose your loans (even if you wanted to), especially the fully digital platforms. There are lenders out there who calculate DTI in community property states by taking the debts of one spouse and counting the incomes of both spouses... which probably makes as much sense to me as the no-income loans that have started popping up again.
But I do love the Non-QM and private lending world as there seems to be a product for everything and everybody underwrites differently. Over the past couple years, I've seen a few surprises such as HELOCs behind HELOCs (and in 3rd lien position) and 2nd lien hard money without any credit pulls (and I know some of these folks have sub-400 credit scores). But when they are more lax in one area, they tend to be tighter in others, such as capping out at 60% LTV or rejecting a borrower who has done dozens of loans elsewhere because of a marijuana felony on their background check from 30 years ago in a state that has legalized it.
But back to the original question... yes I agree with everyone that most DTI-based lenders will still count the DSCR debt against you, regardless of whether or not it reports to your credit. But honestly you just need to plan for things ahead of time. If you're a married couple and one spouse doesn't work, have the non-working spouse take sole title to the property and get the DSCR loan (regardless of whether it reports on credit or not). Then you won't have to worry about it affecting the DTI of the spouse that has income and wants to qualify for conventional loans; note that this doesn't work for FHA and VA loans in community property since you would need to include non-borrowing spousal debt.
When the average investor from bigger pockets tells me that lender A will not report the debt to their credit report and I ask them why that matters they do not say so I can get a 3rd postion HELOC. It is because they do not want the debt counted against them when they go to buy a primary home. (which never makes much sense anyway because the rent can be used to offset at least the majority of the payment anyway) As you know, full doc loans even bank statement loans are going to hold that debt against you no matter if on the credit report or not, and it is also fraud not to disclose it. So, as a lending community here we really need to be honest with our borrowers.
Using net rental income rarely works the way we want it to, in my experience. Depends on how long the borrowers have owned it and how they filed it on their tax returns. Managing DTI is always going to be a struggle for investors. At some point, investors have to stop chasing conventional loans, which are not made for investors.
We probably have different clientele. I do get the ones that you're talking about, who always want to be financeable to buy another primary, but most of mine are always looking to pull out capital out of their existing portfolio to do more projects or to build ADUs on their existing properties. And nobody wants to pay off their 3% mortgages, so being able to get these 2nd and 3rd lien HELOCs have been valuable to them.
The majority of bank statement loans do count unreported debts against your DTI, but not all of them. There are investment bank statement loans (not on primary residences) that will solely go off of what's on the credit report, be able to finance in an LLC, and also not report to credit. It's not the best priced out there (still competitive to DSCR pricing), but it's just another tool in the toolbox.
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