Credit Stacking for Gap Funding

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Doug Smith
Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes
6mo

Three things: 1) Taking on revolving credit will dramatically lower your credit score. 2) Taking on that debt will choke your cash flow and it starts most people circling the drain. 3) Most legit lenders, including us, are going to require you to "source" the down payment by getting the last 2 - 3 months of your bank statements. Any large deposits we're going to want to see and if you're borrowing those funds, we're not going to do the loan. Stacking is a very bad idea. 

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  • Matthew CrivelliBusiness Member
    Lender · MA · Member since 2021 · 1k+ posts · 1k+ votes
    7mo
    Quote from @Jeff Whalen:
    Looking into credit staking to help with gap funding on fix and flips. I’ve been talking with the folks at staking.capital and they sound like they had a pretty cohesive plan. Anybody work with them or use this method to cover their funding gaps?
    Terrible idea. Credit card stacking will tank your credit score and put you in a terrible position if things don't go perfectly. 
    1. What happens if you go over budget and you need extra money to finish the project? First line of defense is credit cards. Can't use those if they are maxed out. 
    2. If you end up needing to refinance to exit the HML (lets say you can't sell in the one year time frame) you will not be able to find a lender who will refinance you at the proper LTV (or at any LTV) if your scores are below 660. 

    What you need is a partner to help fund the deal property. Don't listen to anyone telling you credit card stacking is the way to go. It's extremely risky and the majority of hard money lenders would pull the plug on the loan if they ever caught wind of this plan. 
    [email protected]413-348-8346
    Freedom Capital Funding, LLC523 Reviews
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  • Marcus MarionBusiness Member
    Lender · National Lender · Member since 2026 · 10 posts · 3 votes
    7mo

    Hey Jeff,

    I may know someone who can help with this. It's not my cup of tea personally, but the person I know may have a resource for you. 

    For you, it may best serve you to atleast talk to a person or two about this, just so you have options. feel free to reach out if you are interested. Hope all is well :)

    [email protected]509-432-3573
    Texana Bank Mortgage4.6321 Reviews
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  • Mike Klarman
    Specialist · NJ · Member since 2022 · 1k+ posts · 663 votes
    6mo

    Be careful with credit cards.  Yes, it can work.  They will apply for multiple credit cards in your business name.  The limits will be low.  You will need to use them and pay them off consistently and then when you go to reapply for more cards they'll want you to have little to now balance so you get approved.  The process repeats itself until you have access to tens of thousands and then you need a 3rd part platform to convert the credit into cash and then...

    what happens if the deal blows up?  Cause deals blow up all the time?  You have 30k, 40, 50, in debt at like 20%+ in interest.  That's a tough rug to get out from under.

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  • Marcus MarionBusiness Member
    Lender · National Lender · Member since 2026 · 10 posts · 3 votes
    6mo

    I agree with Mike! Just need to play it right

    [email protected]509-432-3573
    Texana Bank Mortgage4.6321 Reviews
    WebsiteView Page
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  • Doug Smith
    Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes
    6mo

    Three things: 1) Taking on revolving credit will dramatically lower your credit score. 2) Taking on that debt will choke your cash flow and it starts most people circling the drain. 3) Most legit lenders, including us, are going to require you to "source" the down payment by getting the last 2 - 3 months of your bank statements. Any large deposits we're going to want to see and if you're borrowing those funds, we're not going to do the loan. Stacking is a very bad idea. 

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