Profile picture for JT in Md

Credit Checks and their impact when shopping for a mortgage?


I've got great Credit scores and will soon begin shopping for a mortgage for a new second home.  Does the process of speaking with several mortgage companies result in multiple credit checks?  Will these checks impact my score?
  • February 21 2011 - Annapolis
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Answers (23)

One thing that I have learned about credit is that when you have excellent credit, the "negative" items such a credit check have less of an effect on your score as compared to when you have bad credit where anything "negative," such as a credit score is going to have a much greater impact. For example, if you have a score of 750 and get a credit check, it may affect it 3-5 points, where as you have a 650 credit score each pull may affect your score 8-12 points per pull. Hopefully this concept is helpful to you during your mortgage search!

Good Luck
  • March 09 2011
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Depending on the type of loan you apply for pulling reports from several lenders could delay or kill your closing.  Fannie's new soft pull suggestion/requirement can be a royal pain in the neck, ours are done at 12:01am on the day of closing.  Any indication of new debt requires investigation, not pretty if you are on the last day of a rate lock or contract period.  An increased balance on a credit card could result in being sent back to underwriting.  Find a lender you trust and go with it.
  • March 07 2011
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Profile picture for warren w1
I'm not a professional, but have been where you are.  I was searching for 6/7 months on short sales.  And every 45 days, you need a new report to write a contract on another home!  If you do get more than one mortgage company to pull your credit within the 45 days, it does count as one hard pull.  And in my experience, it takes 4 points off of your score.  But the good news is that while the 45 days passes, your credit score does go back up so you wind up right back where you started.
  • March 07 2011
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Hi Chris, all you need to do is call your credit provider, they will confirm.
  • March 07 2011
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Profile picture for Chris Corica
Gordon - please provide a source showing the 5-15 point drop in fico scores for mortgage inquiries to back up this claim.
  • March 07 2011
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Hi JT, in answer to your question, once a lender has pulled you credit report it actually opens a window of time 45 days to be exact in which other lenders can also pull your credit report and your score will only take one hit. generally speaking between 5 and 15 points.

Auto dealers are treated the same but on a 30 day window. Any other hard credit inquiries such as credit cards or installment loans other than auto you would get a hit for each time.
Speak with a few lenders and try to make sure you are confortable working with the loan officer and he/she is responsive to your emails as well as your phone calls. They should take and return calls into the evening as well. Once you have identifies a couple then have each pull credit and give you real quotes. Remember a rate quote today will not be applicable tomorrow because rates change daily in most cases with the excepotion of some of the first time homebuyer programs in Maryland. And make sure to ask each lender to quote on the same program based on No points, 1/2 point and 1 point.  
  • March 07 2011
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@Paul
I agree absolutely, and this is why I want to address the concern for buyers. I realize that the extremes of the market I previously worked in are not what other areas of the country are seeing. And actually, the buyers there are struggling because of low inventory and multiple offer situations, along with the competition of cash buyers. Literally, 20, 30 or more offers on a single listing. Good, legitimate offers from a buyer needing financing are rejected routinely because of the cutthroat competition. Buyers are frustrated and some simply give up. Sadly, most of these are serious buyers, not looking for a steal, just trying to take advantage of the great prices and rates to buy a home.
  • February 21 2011
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Judy,
First, I know the prospect of making offers on various properties that are REO or in litigation can be daunting.  But mortgage professionals do not need to pull your buyer's credit report in order to update an approval letter.  It is done regularly and for many weeks or months until the buyer does get the home they seek.
I do not wish to offend, but if you have worked with someone for 10 months, and they haven't purchased, then maybe you need to revisit the borrower's commitment to buying or is it just they are interested in a steal.  Many will find a "home" over a steal sooner then 10 months.
But yes.  If they do choose multiple lenders, and they do allow the pulls to go over an extended amount of time, then yes, it does affect the score.  You and the bankers that are doing this have an obligation to inform the buyer of the implications and work to find that bank or broker(s) they feel comfortable with. 
  • February 21 2011
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@ Judy,

If there credit scores are changing over a 7 month period and they have had their credit pulled by several lenders.  Even if is spans several months as long as the previuos credit pull was within 45 days that credit pull will have no impact on the credit score.  Credit scores are a snap shot and will vary based on when they are pulled even things like time since the last payment was received or the balance of one account at that moment will have an impact.  I have a feeling you are attributing changes to the credit score to the inquiries when in fact other factors may be playing a role.
  • February 21 2011
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@ Andrew
I have had clients that were actively looking to buy who have had to repeatedly acquire credit approval letters from multiple banks/lenders in order to submit offers on foreclosed properties. With 30 or more offers on many of these listings, it can take months to finally have an offer accepted. My experience is that each of these 30-45 day periods count as a new pull; therefore, if a buyer searches for say, 10 months before having an offer accepted then they have, in fact, had their credit 'dinged,'  six or seven times. I have worked in one of the most hard-hit markets in southern California and have seen buyers struggle with this issue personally and I can see why they would have concerns.
  • February 21 2011
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@ Judy,

You don;t get it...No additional dings and the 30 or 45 day windows starts over with the most recent credit pull so if a lender pulls you credit every 30-45 days it has 0 impact on your score.  Of all the things folks looking to buy a home shoudl be focusing on...this is or shoudl be the least of their worries!

  • February 21 2011
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And one more point as to why credit needs to be pulled.

No credit report = no GFE. So Roxanne, you should be aware that when you say:

"The main reason you would talk to different lenders is to see how the products they offer compare and how thier fees compare with one another"

That cannot accurately happen unless a full application is taken. Only a true GFE will give you an accurate comparison, not a worksheet.

"My question would be why have multiple lenders pull your credit?"

Because no lender is going to give a GFE that they are bound to with a credit report that they did not create. 


  • February 21 2011
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I can understand why you'd be concerned. In this market, it is not unusual for the banks that own foreclosed properties that are listed for sale to ask potential buyers to submit pre-approval letters from a specified lender; this forces the buyer to continually have their credit report pulled--all before their offer is even considered. With multiple offers coming in on these properties, a buyer may have to do this over and over again in a period of several months, and eventually these little "dings" can add up. Also, a credit approval letter usually isn't good for longer than 30 days so even though you have acquired a letter previously from one bank, you may have to repeat the process again later also. I guess the upside is it does give your chosen lender some competition when you do get an offer accepted and the two lenders have to compete for your business. I have heard that having your credit report pulled for a mortgage loan triggers a 30 day window in which all other reports 'don't count' but things are changing so rapidly in this industry that I would advise checking first to see if that is true still; if so, that may lessen the impact somewhat. Good luck--it's a great time to buy!
  • February 21 2011
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Actually I belive that is a Todd Duncan line I picked up in training along the way.  I can't remember what I had for breakfast...real hard to remember where the nuggets of information come from.
  • February 21 2011
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The question is already well answered.   I will say for myself I normally won't take an applicant very seriously if they are unwilling to allow a credit report.  The origination software used by MLOs will populate all data into a system, allow for calculations of qualifying ratios, identify possible problem areas.   It is hard enough to even read a report that isn't pulled from a credit vendor you are not familiar with, let alone to try and manually input all of that data which instantly generates with one click.

My advice would be to narrow down to a few select lenders/MLOs that you feel comfortable with and then have them all run your report the same day so they can send you formal Good Faith Estimates.   If you go this route, it is usually a good idea to let them know you are fielding other offers.

AA - I think you borrowed that last line about Hope from Marc Savitt's letter? I sure hope he succeeds! 
  • February 21 2011
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Unfortunately Roxanne by not letting the lender pull credit you put them into a position that they are quoting loan programs and can't promise to deliver on them.  I have no problem providing detail information to a potential client but I let them know it really means nothing until I have a credit report.  The only report I can use is the one I pull so numbers obtained by another lender really don;t mean anything other than it should be a pretty good guess.  Since a few points in either direction can make a huge difference I prefer to know rather than hope.

I have never thought hope to be a good strategy!
  • February 21 2011
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My question would be why have multiple lenders pull your credit?  Have one pull the credit report and give you a copy.  The main reason you would talk to different lenders is to see how the products they offer compare and how thier fees compare with one another.  For the most part the products are the same but the fees can differ. You also want to work with someone that you feel comforable with and not one that seems to be just pushing to get your business.  Good Luck

  • February 21 2011
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I second what Mike said.  I have read anywhere from 15-45 days depending on the exact scoring model for mortgage inquiries.  In general, within that timeframe you should be ok.  But you could also have on person pull it and send it to you and just go off of that.. Most lenders should be able to give you a rate with a stated score to compare until you are ready to move forward and lock-in.

  • February 21 2011
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Industry standard has been increased to 45 days.

I am amazed at how many Loan officers and realtors tell folks to not have more than one lender pull your credit because of the impact.  Not sure if they do it to prevent consumers from shopping or because they really think it impacts the score.

Not sure which is worse...someone not wanting you to shop or someone that doesn't know what they are talking about!
  • February 21 2011
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Allowing multiple persons to check your credit within a 30 day timeframe does not count against you.  The coding within an industry, auto or mortgage allows the bureaus to see that you are not shopping for 4 or 5 homes, but 1 mortgage.
You can obtain one of your own.  You can use this information to send to those who may compete for your mortgage.  They will have an understanding of what they may be able to offer, without having to pull your credit.  But when the time comes to make an actual application they will require the credit report be pulled.
  • February 21 2011
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I think it might be a 2 week time frame not a month.  All the mortgage inquiries just count as one credit inquiry.  Same with car shopping.
  • February 21 2011
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Profile picture for JT in Md
Thank you, Mike !
  • February 21 2011
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From my understanding, as long as you have them pulled within a month timeframe, then it should reflect as just one pull on your credit report.  This was done to protect the consumer and allow them to shop.  But if you have them pulled by other sources, like a department store or auto financing source, then those will be considered separate pulls and will pull your score down further.
  • February 21 2011
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