Commercial Real Estate Loans and Credit Scores

If you want a commercial real estate loan with the very best commercial mortgage rates, banks and other commercial real estate lenders with "A" quality rates will still look at your tax returns, your P&L statement, and your balance sheet.

For "B" quality commercial real estate loans, however, more and more commercial real estate lenders are making commercial real estate loans based mainly on the credit score of the borrower.  A credit score is a computer-based calculation of a borrower's creditworthiness and the likelihood he will repay his current and future debt.  A credit score is also known as a FICO score.  The scores are ranked from a minimum of 350 to a maximum possible credit score or FICO score of 850.  The national average FICO score is 678.  Here is a rough guide to credit scores:

Excellent credit:              750 - 850

Good credit:                    660 - 749

Fair credit:                      620 - 659

Poor credit:                     350 - 619

There are three major CRA's - Trans Union, Experian Information Solutions, and Equifax Information Services - who provide credit reports and credit scores to commercial real estate lenders.  Each of the CRA's gets their information from a slightly different mix of sources.  Each CRA has it's own proprietary formula for computing credit scores.  As a result, each CRA will produce a slightly different credit score on a potential commercial mortgage borrower.

It is customary for commercial real estate lenders to obtain a tri-merge credit report on a potential commercial mortgage borrower.  A tri-merge credit report combines the results of all three of the major credit reporting agencies. 

When arriving at a single score that fairly represents the results of all three credit scores, it is customary for commercial real estate lenders to use the middle credit score of the potential commercial mortgage borrower.  If a commercial real estate loan borrower had a score of 710 from Trans Union, a score of 699 from Experian, and a score of 692 from Equifax, it is customary for stated income commercial real estate lenders to use the middle score of 699.

You can apply for a commercial real estate loan from scores of stated income and stated asset commercial real estate lenders in just four minutes using C-Loans.com.