Financing in 94158>Question Details

Dif1810, Real Estate Pro in 94158

What's the grace period duration for checking my credit score many times during lenders selection?

Asked by Dif1810, 94158 Tue Oct 2, 2012

I am closing escrow in January and would like to evaluate about 4 lenders to get the best credit score and rate. However, I do not want to have my credit score checked 4 times so that my score does not drop. However, I heard there is a grace period during which multiple lenders can check and does not reduce the score, for a new loan application. What is this period?

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Hi Dif1810,

If you just want to get a quote on rates and fees, you can have your credit pulled once and then provide the scores to the other 3 lenders for a quote.

Please Feel free to contact me for more information or a free, no obligation quote.

John Burke
Senior Mortgage Banker
Peoples Bank & Trust Co.
(877)228-9069
0 votes Thank Flag Link Mon Oct 8, 2012
30 days is what it should be. However it can be as little as 14 and up to 45 days. Very good information about inquiries and how they impact you at http://www.myfico.com/crediteducation/creditinquiries.aspx :

How much will credit inquiries affect my score?
The impact from applying for credit will vary from person to person based on their unique credit histories. In general, credit inquiries have a small impact on one's FICO score. For most people, one additional credit inquiry will take less than five points off their FICO score. For perspective, the full range for FICO scores is 300-850. Inquiries can have a greater impact if you have few accounts or a short credit history. Large numbers of inquiries also mean greater risk. Statistically, people with six inquiries or more on their credit reports can be up to eight times more likely to declare bankruptcy than people with no inquiries on their reports. While inquiries often can play a part in assessing risk, they play a minor part. Much more important factors for your score are how timely you pay your bills and your overall debt burden as indicated on your credit report.

Does the formula treat all credit inquiries the same?
No. Research has indicated that the FICO score is more predictive when it treats loans that commonly involve rate-shopping, such as mortgage, auto and student loans, in a different way. For these types of loans, the FICO score ignores inquiries made in the 30 days prior to scoring. So, if you find a loan within 30 days, the inquiries won't affect your score while you're rate shopping. In addition, the score looks on your credit report for rate-shopping inquiries older than 30 days. If it finds some, it counts those inquiries that fall in a typical shopping period as just one inquiry when determining your score. For FICO scores calculated from older versions of the scoring formula, this shopping period is any 14 day span. For FICO scores calculated from the newest versions of the scoring formula, this shopping period is any 45 day span. Each lender chooses which version of the FICO scoring formula it wants the credit reporting agency to use to calculate your FICO score.

What to know about "rate shopping."
Looking for a mortgage, auto or student loan may cause multiple lenders to request your credit report, even though you are only looking for one loan. To compensate for this, the score ignores mortgage, auto, and student loan inquiries made in the 30 days prior to scoring. So, if you find a loan within 30 days, the inquiries won't affect your score while you're rate shopping. In addition, the score looks on your credit report for mortgage, auto, and student loan inquiries older than 30 days. If it finds some, it counts those inquiries that fall in a typical shopping period as just one inquiry when determining your score. For FICO scores calculated from older versions of the scoring formula, this shopping period is any 14 day span. For FICO scores calculated from the newest versions of the scoring formula, this shopping period is any 45 day span. Each lender chooses which version of the FICO scoring formula it wants the credit reporting agency to use to calculate your FICO score.

Shane Milne | Lending in all 50 states | NMLS #81195
0 votes Thank Flag Link Tue Oct 2, 2012
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