Note Investing: Borrower Credit Check?

Question

What website or company are people using the most when checking the borrower's credit? (assuming you can get the borrower's name and SSN from the note seller).

Thank you,

Dave Van Horn · Answer

@Mark Welp

We use Universal Credit and have for years.

https://www.universalcredit.com/

Logan Hassinger · Answer

@Robert Harpster

I’ll start with the paper that I’m dealing in has interest rates above 8% and is private paper. Now ask yourself, what would a borrower profile look like for paper to be underwritten like this?

• Their credit score is below average or worse (sub 650)
• They likely have a BK in last few years (In my experience)
• Their income isn’t ideal for a traditional bank
•

Now given those factors , why would the borrowers credit be the important to me? If they could of financed with traditional lenders they would have. This takes me back to the same answer when I’m asked why would someone get a private or owner financed loan? Yes, an investor may look for owner financing as they may have hit their cap on Fannie/Freddie loans but we aren’t talking about investor borrowers.

Secondly, the asset or home is my collateral, and if my focus is to buy loans on properties that I don’t mind owning if I have to then I’m perfectly fine going forward with an FC or DIL.

Robert Harpster · Answer

@Logan Hassinger

That makes sense. My thought process was being new to notes, I may not want to take on a non-performer early on. Having a performing note for a few years and then exiting the note gives me more comfort. So in my analysis, I caught myself looking at notes and thinking who is the borrower? Will they continue to pay? If they have had a BK in their past, are they more or less likely to have another? Has their dept to income changes significantly over the past year or two? So I find myself asking myself, what is different about this note than this other note. And credit of the borrower entered into my thinking.

Thank-you for your comments!

Robert Harpster · Answer

@Chris Seveney

Can you elaborate on why you don't check credit on 1st position? I know this is from a few years ago but am curious if this is still the case? Thanks!

Mark Welp · Answer

Thank you both @Dave Van Horn and @Chris Seveney

Appreciate the feedback!

Note Investing: Borrower Credit Check?

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