Great question.
If credit scores didn’t exist, they would ONLY be lending based on property values, which is EXACTLY what hard money lenders do.
They want at least 25% equity and will lend at 12%+, gambling on property values.
With higher credit scores, regular lenders are lending based on credit profile of the borrower AND ability to repay, with the loan secured by the property.
Based on lender experience, (which is what lending is ALL about) less people with higher credit scores will ever walk away.
