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  • Writer's pictureMorgan Sterling

Will a Hard Money Loan Report to My Credit Like a Regular Loan?

Updated: Nov 30, 2023

Hard money lenders san diego

If you are building a real estate portfolio or purchasing a home of your own, working with hard money lenders in San Diego might be appealing for a variety of reasons. After all, a hard money lender is focused on the value of the property itself, not your credit score, when making their decision to lend the funds to you.

On the other hand, if you are trying to rebuild your credit, you might wonder if these loans are going to report to the credit agencies and if these on-time payments will positively impact your credit. Let’s learn more about the process of reporting to credit agencies and how that works.

Credit Reporting Companies

When you take out a hard money loan, you agree to make specific payments according to an agreed-upon amortization schedule. Typically, when you make those payments on-time with other lenders, they will report that fact to all of the credit agencies.

That means they have set up accounts with each of these agencies and are reporting monthly using the specific formats that each agency requests that data be submitted in. Credit reporting service companies will often help businesses with this process, ensuring that all the information they are reporting is appropriately formatted.

If you are delinquent, then that information is typically reported to the credit agencies, often following the same credit reporting service company.

Do Hard Money Lenders Report to Credit Agencies?

When you are borrowing money with less than perfect credit, the goal is to make on-time payments. Those payments are then reported to the credit agencies, and your credit score improves over time as a result. Therefore, choosing the right loan means understanding how it could potentially help improve your credit score.

Depending on the hard money lender you are using, your on-time payments may be reported and thus reflected on your credit report. However, not every hard money lender in San Diego will go through the process of reporting your on-time payments.

Why is this the case? Simply put, the reporting process costs them money and time. They have to find a credit reporting service company, create an account with each agency, and then gather that information to submit it to their credit reporting service company to have them format it correctly. All of that taps into your hard money lender’s resources and could impact the costs of the loans that they provide.

With that being said, many hard money lenders choose to forego the costs associated with monthly reporting of on-time payments. If that is the case, is there any situation where a hard money lender in San Diego would report to the credit agencies regarding your loan with them?

Are You Delinquent?

If you are making regular on-time payments to your hard money lender, then likely, your activity with them will not be showing up on your credit report. However, once you are delinquent, that information may be reported to the credit agencies. Being willing to report delinquencies can give hard money lenders additional leverage to encourage you to get your account with them current.

Keep in mind that hard money lenders are also in the position to move more quickly through the process of repossessing their collateral, which is your property if you do not pay. Of course, these rules may vary from state to state. Reporting your late payments may be their first step to encourage you to get the account current, but it is not necessarily going to be their last.

Therefore, it is essential to remember that although a hard money lender may not be reporting your on-time payments, they can still impact your credit by reporting the late ones. It is important to note that your credit can be improved through hard money loans, simply because your credit score is not impacted by multiple credit inquires. As you continue to make on-time payments to all your lenders, your credit score will improve. Plus, when you refinance or pay off your hard money loan, that can positively impact your credit score as well. There are a variety of benefits that come from using hard money loans.

It is essential to make sure that you read all the information from your hard money lender in San Diego. They can answer any questions about what they specifically report to the credit agencies and what they are not. If you are interested in a hard money loan for your next property purchase, contact us today for a free quote.

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