We hear “I Don’t Want My Credit Pulled Because It Will Lower My Credit Scores!” on a fairly regular basis. As loan officers, we can’t really get a good picture of what you qualify for without the credit report – and often time someone has called us right after they got off the phone with a different loan officer. If you then call us, and want us to do a Pre-Approved for a mortgage, we will necessarily have to pull your credit again. But back to the question, is it true that “Pulling Credit Report Multiple Times Lowers Scores?”
A borrower may simply not be willing to allow us to do that – and it’s a real problem. We can not use someone else’s credit report to base our Pre-Approval letter on. Usually, a Borrower will give us negative feedback about doing this because of one of two reasons. The first is that they believe that pulling credit report multiple times lowers scores.
Generally the borrower has talked to another Loan Originator who has told them not to let anyone else pull their credit, because it will lower their credit score. Generally the reason why a Loan Originator would tell a Borrower this is because they want to eliminate the competition. Essentially, it’s a scare tactic – and they are not being fully honest by telling them this.
The truth is that if two Loan Originators pull a Borrower’s credit within 14 days of each other, it will only count as 1 credit pull, and have absolutely no impact on the Borrowers credit score (My Fico – which is run by one of the Credit Reporting Agencies says this number is actually 45 days… We are suggesting the most conservative number published). In fact the Borrower’s credit can be pulled several times within that 14 day period, and it will only count as one credit pull. Could the Borrower see a change in their credit score from one pull to the other? Absolutely, but it will not be as a result of the credit pull, it will be because a Creditor has reported to the Credit Bureaus in between credit pulls.
Having said this a Loan Originator maybe correct in advising a Borrower to not have their pulled if the Borrower is boarder line on being able to qualify for a mortgage. But the Loan Originator should clearly explain why, and that the Borrower has the 14 day window to talk to competitors. That same loan officer should be taking the time, like we do, to explain to someone what they can do to raise their credit scores.
The second reason why I get the response “I Don’t Want My Credit Pulled Because It Will Lower My Credit Scores!” is so strongly conveyed to us is just as bad. Generally speaking, if we talk to someone who WILL NOT allow us to pull their credit, it’s because the Borrower already knows that their credit is not good, and wants to see if they can get us to give them a Pre-Approval with out pulling their credit. To do so is silly on the part of the Borrower and on any green Loan Originator who might do it. If the Borrower makes an offer on a property, and it is accepted, the Borrower’s credit will have to be pulled in order to submit a loan, and everything will fall apart at that point.
Unfortunately, our experience is that a borrower who fits the profile above will ALWAYS tell us (and the Agent) that they have good credit. Most of them are trying to get into a contract for a home being built, thinking they will have it all fixed by the time the house is finished.
If a Borrower does not let us pull their credit, our conversation is usually a very short one. We will not consider even giving a Borrower a Pre-Qualification Letter based on looking at their credit later.
Sometimes a borrower will want us to use the credit report they pulled. This doesn’t work, because a mortgage credit file looks different from a consumer credit report. The Scores will be different. We’ve also had folks who wanted us to use the credit report provided to them by another loan officer. If the scores are SUPER close – we might consider LOOKING at the report – but we will never use the report as a basis for issuing a Pre-Approval. WHY is that? Did you know that you can make changes to a PDF? The software is out there – and there’s too much risk for fraud for us to put our loan officer license in jeopardy. It’s not that we don’t believe people, it’s just that we’ve seen fraud, and we want not part of it!
There are two things that are an ABSOLUTE MUST when Pre-Approving a Borrower:
- Running a Borrowers Credit Report, which will show their credit scores, and monthly revolving debt.
- Looking at a Borrowers Income, so that Debt-To-Income Ratios can be establish early on the Pre-Approval process.
Remember that Credit Reports are Unique, and they can not be changed in a matter of a couple of weeks. If you are considering a home purchase this year, talk to us NOW so that we can help you get your scores up! Steve and Eleanor Thorne 919 649 5058