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Denied with a 646 credit score.

We recently went through a long drawn out mortgage application that last since April 2012. Eventually it was denied "deliquent past or present obligations with others"
It has been since Feb 2011 since there was only a 30 day late payment. 
I just checked my credit score and I have a 681 694 654. I've also paid off 2 credit cards that have not been reported. 
I know that we're supposed to shop for mortgage within the 30 days for the impact of inquiries on credit reports. Since we've been waiting for approval since April, we're obviously past that timeframe. 
My question is how soon is too soon to check with another lender?
  • August 15 2012 - US
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Answers (2)

Don't understand your question..... were you denied a loan from your April 2012 application and has your credit score now improved from 646 to 694?
If yes, You could ask lender that denied you if improvement in credit score would likely mean getting approved now. You could also start over with another lender, as your loan process timetable seemed excessive.
  • August 15 2012
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Denied: 

Whenever a lender pulls a credit report due to your seeking credit the inquiry does show up on your credit report and also influences your credit score

A mortgage pre-approval is certain to show an inquiry because the lender is making a commitment to loan you money.  If you just get "pre-qualified," it isn't a loan commitment, but it does show as an inquiry if the lender pulls the credit report at your request (because you applied for a loan).  Credit scoring companies treat mortgage and auto loan inquiries a bit differently than credit card lender inquiries.  If you are shopping around for a mortgage and go to several different lenders, the multiple inquiries will not hurt your credit score as long as the applications were made over a fairly short period of time.  When you are seeking a mortgage or auto loan, it could cause many lenders to look at your credit report, even when you are only really seeking a loan from one lender. The credit scoring companies make up for this they have put a formula in so the score will ignore all the mortgage/auto inquiries made within the 30 days before the score.  If you acquire a loan within the 30 days, the inquiries won't affect your score. It appears that you are aware of all these points.  Then, the scoring mechanism looks for auto/mortgage inquiries older than 30 days and if it comes across any, it counts them all as just one inquiry if it falls withing a typical shopping period.  The lender actually can choose the formula version of FICO scoring and the "shopping period" can actually be 14 days
 or 45 days.  Whatever the lender chooses, the credit agency will use to calculate your FICO score.  

If you get preappoved by a lending institution it can definitely help you close the deal on a house since you don't have to have a mortgage contingency in your offer.  If you get pre-qualified, however, it doesn't really help you in negotiating a home sale since it is really just a tool to let you know what size of mortgage you can afford. 
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Since you said that you had paid off two credit cards that hadn't showed up yet, I would suggest waiting at least another month (30 days) before trying again since the credit card payoffs should raise your score.  You didn't mention what kind of payment was late (thus affecting your score), but if it was a mortgage payment it will be very difficult to get away from that one.  Many banks want you to wait at least a year, with a perfect payment record in the duration, before you could be considered a safer credit risk.

While you are waiting, make sure you are paying your bills on time and paying off as much debt as you can, and hopefully you have a sufficient down payment.  
  • August 15 2012
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