Per a Housing Wire report, Experian (one of the 3 major credit bureaus) was fined $3 million for representing that their "purchased" credit scores were the same scores used by Lenders for Mortgage Underwriting decisions. (Housing Wire article link)
Their consumers were, (and I am paraphrasing), "receiving the exact same credit scores that Mortgage Lenders use to make loan and credit decisions". This, they promised, would prove to be a great advantage to these consumers as they started their home shopping and mortgage search.
The CFPB (Consumer Financial Protection Bureau) found Experian's sales approach very misleading ... because it was. They took appropriate action and Experian must now pay for having performed their business in this manner.
The sad outcome of these headlines: Experian's actions may create further distrust of the credit and financing process. And that, in turn, may further increase the misconceptions and fears many consumers have surrounding credit scores themselves.
Credit scores (and credit scoring) can be a very beneficial tool for consumers. But they're rarely viewed as such. Too often, consumers hold a negative view of credit scores and scoring ... and they don't understand how they function or how they can benefit them.
Because of this view: Many potential mortgage clients fear their credit scores being pulled when it comes time to seek financing. I find this to be true with my mortgage clients, whether the client has good or poor credit ... or falls somewhere in between.
Many believe if credit scores are pulled, they'll take an adverse hit. No matter the truth or their particular circumstances, it can be hard to convince them otherwise.
To their defense: It's easy to understand why many believe this to be a fact. It's not uncommon to hear stories about this having happened.
And it's true, depending on the timing of the credit pull and the specific financial/credit circumstances of the client, there can be some impact seen on scores. But typically, if any impact occurs, it's minor.
It's also true: Needless inquiries on credit scores should also be avoided. The same goes for multiple inquiries. Too many inquiries made in a short period of time can prove detrimental to credit scores.
But currently: Much of the mortgage pre-qualification and approval process rests upon credit scores. It's absolutely essential for an LO to pull a tri-merge Mortgage Credit Report in order to provide clients credible advice and an opinion as to the "approvability" of their financing.
Without having credit scores pulled and to rely upon, the reliability of any Approval is weak. It's what could be currently referred to as "fake news" ...
Factual credit scores matter ... and Experian should have known that.
Consumers also need to be aware and know how their credit scores affect their mortgage "approvability", the mortgage programs available to them, their interest rate, and more ...
Working with a New Lenox - Chicagoland Mortgage Originator that is thoroughly educated and sensitive to how credit scores work and affect their clients' financing is vitally important too. Receiving the correct credit advice can mean monetary savings for a Borrower. It can mean the difference between a fluid successful home buying experience and mortgage processing ... possible delays ... or even failure.
When you hope to finance a new home (or refinance your present one), it's no time to rely on "fake news" ... credit scores received from sources that cannot be used in your Mortgage Underwriting Process or for Mortgage Approval.
Let's talk today. Together's we'll discuss the most opportune time to pull your credit scores. Then relax and follow my expertise and guidance moving forward. I have your back and want you to successfully close your loan.
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