Tips on How to Improve Your Credit Score

Hey folks, it's time to get real about your credit score. If you're anything like me, you probably don't pay much attention to it until it's time to apply for a loan or credit card. But did you know that your credit score can make or break your ability to obtain a mortgage loan?

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When you apply for a mortgage loan, lenders take a close look at your credit score and credit history. They want to know if you're a responsible borrower who will pay back the loan on time and in full. A good credit score can help you qualify for a mortgage loan with a lower interest rate and better terms, while a poor credit score can make it more difficult to get approved and result in higher interest rates and less favorable terms.

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In short, your credit score is one of the most important factors that lenders consider when deciding whether to approve you for a mortgage loan. By taking steps to improve your credit score, you can increase your chances of getting approved for a loan with better terms and save yourself thousands of dollars in the process.

1. Check your credit report regularly

This is a no-brainer, but it's worth repeating. Make sure to check your credit report for any errors or fraudulent activity. You can get a free credit report from each of the three major credit bureaus every year, so take advantage of it.

2. Pay your bills on time

This one seems obvious, but it's worth emphasizing. Late payments can have a big impact on your credit score, so set up automatic payments or reminders to make sure you're always on time.

3. Lower your credit utilization ratio

Your credit utilization ratio is the amount of credit you're using compared to your credit limit. Aim to keep your utilization ratio under 30% to improve your score.

1. Check your credit report regularly

This is a no-brainer, but it's worth repeating. Make sure to check your credit report for any errors or fraudulent activity. You can get a free credit report from each of the three major credit bureaus every year, so take advantage of it.

2. Pay your bills

on time

This one seems obvious, but it's worth emphasizing. Late payments can have a big impact on your credit score, so set up automatic payments or reminders to make sure you're always on time.

3. Lower your credit utilization ratio

Your credit utilization ratio is the amount of credit you're using compared to your credit limit. Aim to keep your utilization ratio under 30% to improve your score.

4. Increase your credit limit

If you're struggling to keep your credit utilization ratio low, consider asking for a credit limit increase. Just make sure not to use the extra credit as an excuse to spend more.

5. Diversify your credit

Having a mix of credit types (like a credit card, auto loan, and mortgage) can improve your credit score. But don't open new accounts just to add diversity - only take on credit that you actually need and can handle responsibly.

4. Increase your

credit limit

If you're struggling to keep your credit utilization ratio low, consider asking for a credit limit increase. Just make sure not to use the extra credit as an excuse to spend more.

5. Diversify your credit

Having a mix of credit types (like a credit card, auto loan, and mortgage) can improve your credit score. But don't open new accounts just to add diversity - only take on credit that you actually need and can handle responsibly.

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🏢 Cap Rates vs. Debt Yield vs. DSCR: How Lenders Are Really Underwriting Deals Now

📉 Why Cap Rates No Longer Tell the Full Story in 2026 Commercial Real Estate

Bill Rapp, Commercial Mortgage Broker
January 13, 2026•3 min read

📉 Why Cap Rates No Longer Tell the Full Story in 2026 Commercial Real Estate

🏢 Cap Rates vs. Debt Yield vs. DSCR: How Lenders Are Really Underwriting Deals Now

Why Cap Rates No Longer Tell the Full Story

And what lenders are actually using to approve—or kill—deals like in 2025

For decades, cap rates were the go-to metric for valuing commercial real estate. They were simple, widely understood, and effective in a low-rate, stable credit environment.

That world no longer exists.

In today’s higher-for-longer rate environment, cap rates alone fail to capture financing risk, cash-flow durability, and lender tolerance. As a result, lenders are underwriting deals through a more layered lens—one that prioritizes debt yield, DSCR, and cap rate spread over headline pricing.

If you’re still anchoring decisions solely on cap rates, you’re underwriting yesterday’s market.

The Problem With Cap Rates in Today’s Market

Cap rates measure unlevered yield—not financing risk. They ignore:

  • Actual debt costs

  • Loan structure and amortization

  • Interest rate volatility

  • Cash flow sensitivity under stress

In a 3% interest-rate world, that didn’t matter much. In a 6.5%–8.5% debt market, it matters a lot.

This disconnect is why many “fairly priced” deals:

  • Don’t size

  • Fail lender DSCR tests

  • Require unexpected equity infusions

  • Or stall in credit committee

What Lenders Care About Now (2025 Underwriting Reality)

1. Cap Rate Spread (Not the Cap Rate Itself)

Lenders now focus on cap rate spread over the note rate, not the absolute cap rate.

Why it matters:
A narrow or negative spread signals refinancing risk and limited exit flexibility.

Typical lender comfort zones:

  • 200–300 bps spread = strong

  • 100–200 bps = cautious

  • <100 bps = credit stress

A 6.0% cap isn’t “good” if the loan prices at 7.25%.

2. Debt Yield (The New Credit Anchor)

Debt Yield = NOI á Loan Amount

This metric answers one core lender question:

“If we had to take this property back, does the income justify the loan?”

Why lenders prefer it:

  • Ignores interest rates and amortization

  • Cannot be manipulated with leverage

  • Reflects true income support

Common 2025 targets:

  • Multifamily / Industrial: 8.5%–10%

  • Office / Specialty: 10%–12%+

Deals with strong debt yield still close—even when cap rates look “tight.”

3. DSCR (Cash Flow Margin for Error)

DSCR = NOI á Annual Debt Service

DSCR determines:

  • Loan proceeds

  • Interest-only eligibility

  • Reserve requirements

  • Pricing adjustments

Typical lender minimums:

  • 1.25x–1.35x stabilized

  • Higher for transitional or short-term debt

If DSCR fails, the deal restructures—or dies.

Why This Matters for Investors and Owners

Cap rates are still relevant—but they’re no longer decisive.

In 2026, capital markets discipline has shifted power to lenders, and underwriting now rewards:

  • Conservative leverage

  • Durable NOI

  • Clear exit paths

  • Realistic refinance assumptions

This is why experienced borrowers are:

  • Underwriting to debt yield first

  • Stress-testing DSCR

  • Using cap rate as a contextual metric—not the anchor

How a Mortgage Broker Adds Real Value Here

This is where most deals break—or get saved.

A strong mortgage broker:

  • Structures leverage around lender metrics, not broker assumptions

  • Matches assets to the right capital stack

  • Anticipates credit committee objections before submission

  • Aligns pricing expectations with executable debt

At Medallion Funds, our job isn’t to quote rates—it’s to engineer approvals in a tighter credit market.

Final Takeaway

Cap rates tell part of the story.
Debt yield, DSCR, and cap rate spread tell lenders whether the deal actually works.

If you’re underwriting like it’s 2019, you’ll keep getting last year’s rejections.

If you want deals to close, you need to think like the capital providing the money.

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Š 2023-2024 Bill Rapp, Medallion Funds LLC, Director of Capital Advisory

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Bill Rapp - Commercial & Residential Mortgage Broker

Whether you're a first-time homebuyer, a seasoned investor, or a business owner with ambitious plans, securing the right financing is crucial. At Medallion Funds, we take the guesswork out of mortgages, offering a comprehensive suite of residential and commercial loan options to fit your unique needs. Looking for Your Dream Home? We understand the excitement and challenges of navigating the residential real estate market. Our experienced mortgage brokers will guide you through every step, from pre-qualification to closing. We offer a variety of loan programs to suit your financial situation, including: • Fixed-rate mortgages: Offering stability with predictable monthly payments. • Adjustable-rate mortgages (ARMs): Providing competitive rates for a set period. • FHA loans: Making homeownership accessible with lower down payments. • VA loans: Rewarding veterans with attractive rates and flexible terms. Investing in Your Business Future? Growth often requires capital, and we can help you unlock the potential of your commercial property. Our brokers specialize in a wide range of commercial loan options, including: • Purchase loans: Financing the acquisition of new buildings or land. • Construction loans: Facilitating the development of your project. • Refinance loans: Restructuring your existing mortgage for better terms. • SBA loans: Providing access to government-backed financing for qualified businesses. The Medallion Funds Difference: We go beyond simply finding a loan. We take the time to understand your goals and develop a personalized strategy. Here's what sets us apart: • Expertise: Our brokers have a deep understanding of both residential and commercial lending. • Competitive Rates: We leverage our strong lender relationships to secure the best possible terms. • Streamlined Process: We handle the paperwork, keeping you informed every step of the way. • Exceptional Service: We're committed to providing you with a positive and stress-free experience. Ready to Take the First Step? Contact Medallion Funds today for a free consultation. Let's discuss your financing needs and help you achieve your dreams!

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Copyright Š2021 | Mortgage Viking Team

Licensed to Do Business | NMLS # 228246


This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply. Copyright Š 2021 | Medallion Funds


Corporate | NMLS ID NMLS # 1825831

Corporate Address : 2651 N. Green Valley Pkwy STE. 101 Henderson, NV 89014

Corporate NMLS NMLS # 1825831 | Company Website: https://medallionfunds.com/bill-rapp/

Copyright Š2021 | Mortgage Viking Team Licensed to Do Business | NMLS # 228246

This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply

Corporate | NMLS ID NMLS # 1825831

Corporate Address : 2651 N. Green Valley Pkwy STE. 101 Henderson, NV 89014 https://medallionfunds.com/bill-rapp/