Home Buying in 94539>Question Details

Newtomarket, Home Owner in Fremont, CA

Is credit score affected when shopping for mortgage rates?Can we apply for like 10-15 banks and not worry about credit score being hit?

Asked by Newtomarket, Fremont, CA Sun Feb 20, 2011

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You do not want 10-15 mortgage inquiries on your credit report within a short amount of time because it can be seen as a redflag. My honest opinion is to have someone run your credit and pay the $18 it cost the broker/lender and bring a copy with you to get an idea from other banks.

The other thing to consider is closing time and lending requirements. Even with 20%+ down 740+ fico score and low income to debt percentage. Getting a loan can still be challenging.

I hope this helps.

Thanks,

-Gilbert
1 vote Thank Flag Link Mon Feb 21, 2011
This is an old questions with a current answer:
Credit score models allow you 30 days to run your credit with as many lenders as you need to get the right fit for you.
Once you hit that 31st day, every time you run your credit you will be effectively negatively by about 10 points.
0 votes Thank Flag Link Mon Dec 8, 2014
This is a common question and we have never received a direct and warrantied correct answer. The general rule, we are told, is that there is no negative effect to your score if you stay in the same industry, i.e., mortgage only, car loan only... There is a time frame to do these inquiries. Your mortgage contact would be the best source for this answer.
0 votes Thank Flag Link Mon Dec 8, 2014
go through a broker to save credit rpt $ & hassle.
0 votes Thank Flag Link Sun Dec 7, 2014
If you apply for a lot of banks it'll hurt, but, in theory things should consolidate as a single event pull from a score perspective and not be devastating.

That having been said, it's been my experience that EVERY time have applied for a mortgage over the last 5-10 years my score mysteriously drops 20-40 points, even if only one inquiry and no other data.
0 votes Thank Flag Link Mon Jun 17, 2013
Anything you do can impact your success or failure in this market climate. Depending on the type of loan you apply for it could be a train wreck. On conventional conforming loans there is a new soft pull requirement on the day of closing. Not sure if this is already a requirement, we have already implemented it and been using the new system our developers designed. It would stop your closing on the day of closing in our shop until all of the inquiries had been investigated.
Web Reference: http://jamessimms.com/
0 votes Thank Flag Link Mon Feb 21, 2011
Newtomarket,

Having had experience at bank, brokers and direct lenders, I can tell you as a matter of fact, that the best is the combination of all three. I work for Summit Funding - having left a bank and brokerage for my clients sake.
Here I operate with a direct lender (who can underwrite and fund their own loans) a brokerage (where I can send the loan out for additional varietsy of programs and as a correspondent lender - the best of all three. We have the ability to underwrite loans for such wonderful banks as Bank of America, Wells Fargo, Chase, GMAC and others without having to send the loan to them until completion.
This allows us to operate much faster than individual banks and lending institutions and - relating to what you were just mentioning, we pull only one bureau.
There is no need to send it to multiple lenders or have each approve you for the best lender - or the best rate. Which is exactly why I moved to this type of lender - it benefits the client most.

Hope this helps you my friend.
0 votes Thank Flag Link Mon Feb 21, 2011
Newtomarket, if you want to shop, there is no need to have more than 1 or 2 people run your credit. We all know that if someone gives you a score, that's the same score we will get, and can give you an idea of our rate and costs from that and the other particulars.
As far as thinking that you can apply to a few different lenders or brokers, you are going to be the one losing out. Some of us will not take a loan from someone that we know has applied with someone else. We don't make money unless the loan closes, so to waste the time of my staff, and have you close with someone else, is not what I want. I am happy to spend time with you, go over whatever you want to go over, have everything explained, answer all your questions. However, once I take your application and my processor and underwriter get involved, I want to have your commitment to me.
0 votes Thank Flag Link Mon Feb 21, 2011
Shopping mortgage rates and fees, you'll find very little difference with banks, brokers and lenders. The market is extremely competitive right now. The difference will be in the quality of service you'll receive.

Happy funding, Rudi
Web Reference: http://www.umboc.com
0 votes Thank Flag Link Mon Feb 21, 2011
No, talk with a lender and they can explain but you (consumer) have a 6 month window to shop around and all the "hits" count as one collective hit.

Best of luck.

Spirit
0 votes Thank Flag Link Mon Feb 21, 2011
Gilbert has the right idea. Have your current Fico score available and check with 2-5 Banks or Lenders. You probably need to speak to a Broker as they may have a few more programs available then your Local Bank.
0 votes Thank Flag Link Mon Feb 21, 2011
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. Inquiries can have a greater impact if you have few accounts or a short credit history.

Here is the verbage from the website I referenced below:

"When looking for a mortgage, auto or student loan, 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."
0 votes Thank Flag Link Mon Feb 21, 2011
I have shortlisted banks, but not sure which is providing best cost and rate. I plan all banks to hit my report in 2-3 days or week max. and then finalize bank. Can I still fill loan application in multiple banks and not worry about credit score. I don't plan to take any other loan in next few months or even year from now, but want to shop now.
0 votes Thank Flag Link Mon Feb 21, 2011
If you are shopping for a mortgage loan, auto loan and/or student loan, all inquiries made within 30 days from scoring are ignored. If you surpass the 30-day mark, then each inquiry will be scored individually. According to Fair Isaac, all three Credit Reporting Agencies are now using the same program to calculate inquiries.

"Here are the exceptions made for auto, mortgage and student loan inquiries:

•An inquiry buffer is in place and all AUTO, MORTGAGE, and STUDENT LOAN inquiries within 30 days from Scoring are IGNORED.
•AUTO, MORTGAGE, and STUDENT LOAN inquiries in any 14 day period count as one inquiry, this is called de-duplication in the industry (like you really wanted to know that).

All other credit card, charge card, cell phone, bank loan, insurance or any other credit inquiries that are not mortgage or auto related count separately."
0 votes Thank Flag Link Mon Feb 21, 2011
Yes, your credit score influence shopping for mortagege rate. If your credit score is bed, you get higher rates. Furthermore, each time you apply mortgage or credit card your score goes down.

Ayub Azam
Web Reference: http://www.AyubAzam.com
0 votes Thank Flag Link Mon Feb 21, 2011
Hi there,

If your credit is good enough to warrant "rate shopping" then I don't think it's going to be that big of an impact to you.


From MyFICO:
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.


All the best!

Jonas Mancuso
Remax Int'l
http://www.choosetheballoon.com
0 votes Thank Flag Link Mon Feb 21, 2011
Every time you fill out a Mortgage application, your credit will lose a few points. The credit rating system is based on mathematical logarithms. If you apply to more than three lenders, at some point the program assumes you have been denied credit, and you could lower your credit score enough to put you at a higher interest rate. Your goal is to get the lowest rate. There is no reason to apply to fifteen lenders. If you want the best rate, then have your agent do their homework. I can say that Bank of America has very good rates. If you are buying a foreclosure property, then I suggest you get your first pre-approval from Bank of America, Wells Fargo, Chase, or Prospect Mortgage. Once your offer is accepted you can shop for a lower rate, but only run your credit 2-3 times.

Best of Luck!
0 votes Thank Flag Link Sun Feb 20, 2011
Yes, your cedit score will be affected when rate shopping.

You should worry about your credit score being hit if you apply to 10-15 banks (?). 2-3 lenders may be enough. Ask your realtor for referrals to lenders who arre responsive, resourceful, responsible. Find a LOCAL lender if at all possible, someone you can meet person-to-person instead of someone who's in a call center, in a different state, in a different time zone.

Go to http://www.myfico.com/crediteducation/creditinquiries.aspx

Scroll down to
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.

NOTE: So, if you fFIND 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.
0 votes Thank Flag Link Sun Feb 20, 2011
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