Best way to get investment loan without effecting credit score ?

Question

Hi, I am a newbie to property investment who purchased a secondary home and a investment property using the same lender within  a few months timeframe. I see this effecting my credit score heavily. Is there a better option to obtain loan without effecting credit scores? Should i wait longer before i purchase a investment property like an year between each ? Or should i use a different approach without taking a loan ?

Chris Mason · Answer

Huh? A track record of on-time mortgage payments helps your credit score. People with 2 or 3 mortgage payments, all reporting current and never late, are almost always in the high 700s, often into the 800s.

Folks with minimal credit  history because they think having their credit pulled 'hurts' their credit (without considering the relatively MASSIVE benefit of the subsequent on-time payment history, especially for installment debt [less so for revolving debt]) are in the 600s, low 700s.

Kenneth Garrett · Answer

@Anthu Tam

I would worry more about your DTI that could be impacting your credit score.  If your DTI is causing the low credit that is a different story.  I agree with the others it should not impact your score much unless your ratios are high.  You can use commercial loans, no impact to your score other than a pull.  The loans will not show up on your credit.  The rate will be higher and you’ll need to own it in an entity.  It is another option.

Clint G. · Answer

@Anthu Tam

I'm in the process of buying my second SFH in 3 months, and I could care less about what it does to my credit score. Why? Because I never miss payments and my lenders know this. I've bought 3 homes in the past year, all traditional 30 yr fixed mortgages and my credit score has maybe fluctuated 5pts +- during that time...still over 800.

Something to note is the more deals you do, the more relationships you create with your lenders. Over time, they see that you're serious and can pay the bills. That's what matters most.

Can't take a credit score to the bank.

Eric Veronica · Answer

I continue to be completely perplexed where the fear of a credit inquiry is coming from. I hear this from customers constantly. More now than ever before.  This conversation is so prevalent that I feel like there is some big time lobbying money or corporate initiative trying to convince the general public that a credit inquiry is financial suicide.  Some of y'all act like "Thou shall not inquire on credit" should be added as the 11th commandment.

You mentioned that these multiple credit scores have had a substantial impact on your credit score.  If your score has dropped that much I would guess that there is something else going on on.  Maybe a collection you didn't know about?  Maybe a credit card balance has increased above 50% of the high limit?  in 15 years as a loan officer I have NEVER told a client that they cant qualify for a loan because the amount of credit inquiries have tanked their score. Personally I have 12-15 inquiries per year and I have a score around 800.

Bottom line... dont let fear of a credit inquiry stop you from shopping for a good deal.  The reality is a few credit scores here or there are not going to cause any long term issue with your credit score

One other thing.... If you are looking at your credit report and you see a negative note that says " Too many inquiries in the last 12 months" you should roll your eyes an move along.  This negative comment pops up on almost every credit report that I pull.  In fact, I will often see this comment on customers who have not had their credit pulled in over a year!

Twana Rasoul · Answer

I personally wouldn't worry about that as long as your credit history shows you are making your payments on time and make sure to have reserves as you continue to add to your portfolio

Anthu Tam · Answer

Thanks, @Twana Rasoul @Chris Mason @Kenneth Garrett @Clint G. for your response.

Best way to get investment loan without effecting credit score ?

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