While shopping for best rate, how badly credit pulls hurt my score? I am looking at 3 lenders.

Asked by AshburnLover, 20147 Sun Sep 15, 2013

I had to get my mortgage thru builder's lender due to some incentives involved. I also get an option get quotes/possibly obtain from affiliate lenders without losing the incentives. but my only concern is how badly does it hurt my score for each hard credit pull done by these other lenders.. my score is 735 now and am 2 months away from my closing.I recently paid of some of my debts and anticipating a 750-760 score in next couple weeks as a result.

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8
Josh Barnett, Agent, Chandler, OK
Mon Sep 16, 2013
BEST ANSWER
They do not if done within the same week, the credit bureaus know you are going to shop your rate.
2 votes
Nick Pakulla, Mortgage Broker Or Lender, Rockville, MD
Mon Sep 16, 2013
This is difficult for any one person to answer, you'd need to refer to each of the credit agencies. The general rule is that mortgage shopping is not treated the same as opening credit cards. Here are the answers from each agency via a quick google search:

http://www.experian.com/blogs/ask-experian/2013/04/24/multip…

http://www.myfico.com/crediteducation/creditchecks.aspx

http://blog.equifax.com/credit/will-interest-rate-shopping-h…

They keep their scoring models proprietary, and they do constantly evolve. You should in general be able to get a mortgage quote as long as you know your scores without the lender initially pulling your credit. However, in order to lock in most Lenders will want to pull credit and review all of your documentation.
3 votes
My NC Homes…, Agent, Chapel Hill, NC
Mon Sep 16, 2013
Not badly and there's no difference in the loan offer you're going to get based on a score between 740 and 760 as I believe 740 is the cut off point for getting the best rates. I would not suggest doing this however until you're ready to actually lock a rate and the shorter the rate lock period the better the origination fee. I'd suggest trying to keep it between a minimum of 30 days and a maximum of 40 days. I'd also suggest talking to the various lenders your considering and asking them to give you a quote based on a 740 tri merged credit report score without pulling it and that you'll let them pull it once you decide who you're going to go with. Also question them about rate lock periods. You could do this now and be ready to pull the trigger in 2-3 weeks.

Good Luck!
2 votes
I was getting in touch with one of affiliate lender and I was told they need to do a hard pull without which their loan processing engine can not give the best rates. Is this true?
Flag Mon Sep 16, 2013
Thanked
Flag Mon Sep 16, 2013
Scott Godzyk, Agent, Manchester, NH
Mon Sep 16, 2013
It will only count as one pull in a specific amount of time whether you shop 1, 2, 3 or more companies. Each credit bureau does have the answers in their FAQ. It was nice of Nick to post the links below.
2 votes
Dana Wright, Agent, Ashburn, VA
Mon Sep 16, 2013
When a hard credit is pulled within 30 days before closing it will not effect your score, but as a rule you do not want to have credit pulled unless necessary. As a general rule think every credit check can lower your score 3-7 points. FYI...This is not the time to get 10% off on all your purchases at department stores either that will result in a hard credit pull. I would also check the local credit unions as they have very competitive rates too!
Some builder's lenders are charging 1 point of the loan amount plus other fees, which brings down their incentive considerably. Most of my lenders do not. If you have additional questions I have several local lenders that can advise you. Please contact me @ 703-405-8302 Dana Wright
I hope this helps!
1 vote
Sonal Goda, Agent, Chantilly, VA
Mon Sep 16, 2013
Hello - as you can see in the links from Nick - if you are shopping around in a short period of time (recommend 1 week to be on the safe side) for the same type of mortgage and same amount, it should be equivalent to one credit inquiry on your report. A credit inquiry generally affects your credit some small number of points - I've heard between 3-6 points. And your credit score recovers quickly from it. Is your score 735 when you pull it yourself or is that your credit score as pulled by a mortgage company? The mortgage company score formula often results in a lower score than what you pull yourself. There are many different formulas for credit scores, depending on the purpose.

Thanks,
Sonal
1 vote
735 is middle score after pulling 3 agency scores by the lender.Thanked
Flag Mon Sep 16, 2013
Thanked
Flag Mon Sep 16, 2013
Jim Simms, Mortgage Broker Or Lender, Louisville, KY
Mon Sep 16, 2013
No one can give an exact number, an inquiry is only one tiny piece of your credit file, the matrix each of the repositories use scores things differently, but they all look at the total.

Jim Simms
NMLS # 6395
JSimms@cmcloans.com
Financing Kentucky One Home at a Time
I answer questions about financing real estate based on my decades of experience dealing with mortgage underwriters. I do not offer legal or tax advice, if you need answers from an attorney or CPA find one knowledgeable in your local market.
Web Reference:  http://jamessimms.com/
1 vote
Bree Lawrence, Agent, Leesburg, VA
Thu Mar 5, 2015
I know this is an old post but I wanted to comment for those who have the same questions that may be viewing these answers. I work mostly in Fairfax & Loudoun Counties in Northern Virginia. Rules may be different depending on where you are so please always contact a mortgage broker to ask specific questions...

When looking for a home generally you have 30 days to where your credit will not be hurt multiple times while you are shopping for 'mortgage rates/lenders'. You will only get the 1 initial inquiry as your credit is being run.

So...
Lender #1 Pulls Credit ---Start of 30 day clock. Initial Inquiry (as they are the first to check the credit)
Lender #2 Pulls Credit w/in that 30 day period ---No reduction of score
Lender #3 Pulls Credit w/in that 30 day period ---No reduction of score
Lender #4 Pulls Credit w/in that 30 day period ---No reduction of score

Now of course rules change all the time so always check with your lender, or even call any of the 3 large credit reporting agencies (TransUnion, Equifax & Experion).

There is also a new tool that is 'actually' free you can check your credit...CreditKarma.com. They dont ask for any credit card info like other sites.

Should anyone need help or anything else, you can always conact me and I will get you the answers you need.

Bree Lawrence
571-244-9896
Bree.Lawrence@cbmove.com
0 votes
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