One of the more common fears among prospective home buyers is the
penalty that is assessed with pulling a credit report. Most folks have heard
through one outlet or another than pulling credit for any reason will result in
a penalty and a drop in FICO Score, this is not necessarily the case.
First off, it is important to know the
difference between “Hard” Inquiries and “Soft” Inquiries. A Hard Inquiry is
when a person has their credit pulled for the sake of securing new financing,
such as buying a car, opening a credit card, applying for a mortgage. A soft
Inquiry is an informational credit pull and is not used by banks and lenders
when applying for credit. Many folks will attain their credit report from an
online credit agency such as Experian or Credit Karma, these soft credit pulls
will actually have no penalty on a person’s credit score. Hard Inquiries
however, will come with a penalty of anywhere between 2 and 5 points per
inquiry! Inquiries will penalize you more on the front end (2-5 points for 0-6
months) than they will on the back end (1-2 points from 6-12 months).
Inquiries will penalize a person’s credit
for 12 months, but credit bureaus will actually track them for 24 months.
Inquiries are slightly different when
pulling credit for mortgage purposes. Penalties associated with multiple
mortgage inquiries aren’t always assessed up front, in fact most penalties
won’t kick in until 30 days after the first inquiry because a 30 day
duplication window is usually being figured into the equation. If a person pulls
their credit with 5 separate mortgage lenders in a 30 day period, the first
inquiry will be the only penalty that is charged during that initial 30 day
period. However, once 30 days passes from the first inquiry all 5 inquiries
will now be impacting the credit score! A penalty of 2-5 points per inquiry
could mean as much as a 25 point drop in credit score.
Sean Nealon
V.P – Business Development
Direct: 303-495-3244
Sean@Continentalcreditllc.com
Inquiries can be removed from credit
reports with relative ease, if you have questions about getting inquiries
removed from your credit report please give me a call at 303-495-3244 or send
me an email at sean@continentalcreditllc.com.
Or call our local expert:
Curtis Mangus
Mortgage Loan Officer
Office: 208-629-4959
Cell: 208-412-3676
curtis@thelendingspot.com
8599 W. Hackamore
Boise, Idaho
thelendingspot.com
NMLS# 9752
Mortgage Loan Officer
Office: 208-629-4959
Cell: 208-412-3676
curtis@thelendingspot.com
8599 W. Hackamore
Boise, Idaho
thelendingspot.com
NMLS# 9752
