Why It’s Smarter to Run a Hard Pull Upfront
It removes guessing and uncertainty and helps me issue a bullet proof pre-approval. A soft pull will only show me one of your three scores - Trans Union. However, lenders use the middle of your three scores to determine eligibility.
I cannot run your loan through an automated underwriting system engine with a soft pull. This requires a tri-merge.
AUS decisions show me a wealth of information that will help me pre-approve you correctly from day one.
- It will determine the documentation needed to close your loan (1 or 2 years of tax returns, etc.)
- It will tell me if the transaction qualifies for a property inspection waiver or requires a full appraisal.
- It will tell me whether the transaction qualifies for a limited condo review or requires full review.
- And more…
The credit report itself shows a wealth of information about your current and past credit history, which helps me determine the best investor for your transaction:
- All 3 credit scores
- Account holder (borrower, co-borrower, joint)
- Type of account (lease vs. loan, etc.)
- Status of account (deferred, in repayment, etc.)
- Number of open vs. Closed accounts
- Age of each account
- Balance and monthly payment of each account (this determines your debt income ratio)
- Authorized User Accounts (payments can be ignored if made by the account holder)
- Late payment dates
- Collections and Judgments
- Bankruptcies and foreclosures
- And more…
What determines my credit score?
https://www.myfico.com/credit-education/whats-in-your-credit-score
Credit score versions
Many clients ask me why my credit scores are different from what they pulled themselves online.The answer is simple. There are several different scoring models that use different algorithms to determine scores.
Mortgage lenders specifically use Fico Score Version 5, 4 & 2.
https://www.myfico.com/credit-education/credit-scores/fico-score-versions
Credit inquiry impact on credit scores
Credit inquiries have a very small impact on your scores.They should not move a score more than 4-5 points, if at all. And multiple mortgage inquiries run within a 45-day shopping period should have no impact on the original set of scores, per myfico.com.
https://www.myfico.com/credit-education/credit-reports/credit-checks-and-inquiries
Do credit inquiries affect my FICO Score?
FICO's research shows that opening several credit accounts in a short period of time represents greater credit risk. When the information on your credit report indicates that you have been applying for multiple new credit lines in a short period of time (as opposed to rate shopping for a single loan, which is handled differently as discussed below), your FICO Scores can be lower as a result. Although FICO Scores only consider inquiries from the last 12 months, inquiries remain on your credit report for two years.
If you apply for several credit cards within a short period of time, multiple inquiries will appear on your report. Looking for new credit can equate with higher risk, but most Credit Scores are not affected by multiple inquiries from auto, mortgage or student loan lenders within a short period of time. Typically, these are treated as a single inquiry and will have little impact on your credit scores.
Source: www.myfico.com
How much will credit inquiries affect my score?
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 your FICO Scores. For most people, one additional credit inquiry will take less than five points off their FICO Scores.
For perspective, the full range for FICO Scores is 300-850. Inquiries can have a greater impact if you have few accounts or a short credit history. Large numbers of inquiries also mean greater risk. Statistically, people with six inquiries or more on their credit reports can be up to eight times more likely to declare bankruptcy than people with no inquiries on their reports. While inquiries often can play a part in assessing risk, they play a minor part are only 10% of what makes up a FICO Score. Much more important factors for your scores are how timely you pay your bills and your overall debt burden as indicated on your credit report.
Source: www.myfico.com
What to know about rate shopping
Research has indicated that FICO Scores are more predictive when they treat loans that commonly involve rate-shopping, such as mortgage, auto and student loans, in a different way. For these types of loans, FICO Scores ignore inquiries made in the 30 days prior to scoring. So, if you find a loan within 30 days, the inquiries won't affect your scores while you're rate shopping.
In addition, FICO Scores look on your credit report for rate-shopping inquiries older than 30 days. If your FICO Scores find some, your scores will consider inquiries that fall in a typical shopping period as just one inquiry. 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 Scores.
Source: www.myfico.com
Hard pull alternative
If you’d like to avoid a hard pull upfront, but would like to see what your THREE MORTGAGE credit scores are, please follow the instructions below.
- Go to www.myfico.com
- Create an account*
- Click on SCORES
- Click on MORTGAGE to view Fico Scores 5, 4 & 2
- You will see your 3 mortgage scores
- You should also be able to see all open accounts and the current balances
- I’ll need you to tell me what the monthly payment is for each.
*They charge approximately $43/month and you can cancel at any time