Bank Said No. Keystone Funded It.
Weak credit doesn’t always mean a weak deal.
Traditional lenders often place significant weight on credit scores. In private lending, the bigger question is whether the overall deal makes sense.
A recent Keystone file was a good example.
The borrowers were unlikely to qualify for traditional financing, with credit scores in the low-to-mid 500s. At first glance, it could have looked like an easy decline.
But once we looked beyond the credit report, a much stronger story emerged.
The Deal
A father was selling his home privately to his son, with gifted equity providing the down payment.
The mortgage would also consolidate existing debts, giving the borrowers an opportunity to stabilize their finances and rebuild their credit following a period of financial hardship.
Rather than asking whether the borrowers fit a conventional lending box today, we looked at the strength of the security, their ability to move forward, and—most importantly—the plan to exit the private mortgage.
Why the Deal Worked
Several factors helped offset the weaker credit profile:
Approximately 42% LTV in first position.
The low loan-to-value provided substantial equity protection.
Stable employment.
The primary borrower had returned to full-time employment, supporting the ability to manage the loan.
A marketable property.
The property was located in the Annapolis Valley, Nova Scotia, providing tangible real estate security behind the mortgage.
A realistic exit strategy.
The plan was straightforward: consolidate debt, rebuild credit, and work with the mortgage broker toward refinancing with a B lender once the borrowers were in a stronger financial position.
An interest reserve.
An interest reserve was incorporated into the mortgage structure, helping reduce immediate monthly payment pressure while the borrowers worked toward their exit.
Taken together, the equity, property, borrower circumstances, and exit strategy created a structure that made sense for both the borrowers and Keystone.
Credit Is Part of the Story—Not the Whole Story
This is where private lending can be different.
A low credit score matters, but it doesn't necessarily tell you whether a mortgage is a good lending opportunity. Keystone's underwriting approach considers the complete file, including equity, collateral quality, borrower credibility, and the strength of the exit strategy.
Keystone's lending guidelines do not set a minimum credit score; lower credit is instead considered within the overall risk profile of the transaction.
That means a bank decline doesn't automatically mean the deal is dead.
For brokers, the question becomes:
Is there enough equity, a marketable property, and a sensible path to repayment?
If there is, send us the story.
We'll look beyond the score and review the entire opportunity.
Have a deal that doesn't fit the traditional lending box?
Send it to Keystone for review.
All financing is subject to underwriting, appraisal, and lawyer review. Individual lending decisions depend on the complete circumstances of each file.
