Fannie Mae recently announced that lenders are required to pull your credit hours before closing – and any inquiries on your credit report must be explained. We figured you might want to know more about how Inquiries affect your score. In general, too many inquiries on your credit report will lower your score.
An inquiry on your credit report shows up when you allow someone to look at your credit.
An inquiry from www.annualcreditreport.com is not going to have an impact on your score – however it does not give you a real FICO score! It is only for accuracy of your report. You will get Factor Codes – but not the score.
Does the TYPE of Inquiry Matter? Yes.
A “Below the Line” – soft inquiry, like an account review from a creditor, does not have an impact on your credit score. The folks who do an employment pull are also below the line.
“Above the Line” Inquiry has a negative impact on your credit score. Meaning when you apply for a credit card, mortgage, car, etc it will negatively impact your score. These pulls (inquiries) have a 30 day buffer. Meaning if you apply for an auto loan from 5 places during a 30 day period it will not have an impact on your score right then. During the 31st day to 45 day period all of them are seen as ONE pull… If you apply for credit again after the 46th day it will be seen in the scoring model as new credit, and those “pulls” or inquiries have a negative impact on your score.
So how does this translate into the Mortgage Process? It’s pretty serious. If you begin the mortgage process in May and we pull your credit report… and then you purchase a home in June… and then you close in July. Your credit report is good for 90 days. So theoretically, no problem.
But with the new requirement to pull a new credit report right before closing – even if it’s just your mortgage company and you haven’t purchased a sofa, or refridgerator – THAT inquiry could lower your score.
If you have questions about Inquiries On Your Credit Report and your credit score, please call Steve Thorne, a Veteran Mortgage Banker in Cary at 919-649-5058. Connect with us on Facebook