I Don't Want My Credit Pulled Because It Will Lower My Credit Scores!

By
Mortgage and Lending with George Souto NMLS #65149 FHA, CHFA, VA Mortgages NMLS #65149
https://activerain.com/droplet/BKp

I hear "I Don't Want My Credit Pulled Because It Will Lower My Credit Scores!" on a fairly regular bases, when I tell a Borrower who is looking to be Pre-Approved for a mortgage that I need to run their credit in order to Pre-Approve them.  The reason why a Borrower will give me this response is usually because of one of two reasons.

The first is because they have already talked to another Loan Originator who has told them to not 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, so they will scare the Borrower 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.  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.

The second reason why I get the response "I Don't Want My Credit Pulled Because It Will Lower My Credit Scores!" is because the Borrower knows that their credit is not good, and wants to see if they can get a Loan Originator to give them a Pre-Approval with out pulling their credit.  To do so is silly on the part of the Borrower and Loan Originator.  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.  By the way Borrowers who don't want to have their credit pull for this reason will ALWAYS tell me that they have great credit.

If a Borrower does not let me pull their credit our conversation is a very short one.  I will not consider even giving a Borrower a Pre-Qualification Letter based on looking at their credit later.  If a Borrower does not let me pull their credit, they are wasting my time, their time, and the Realtors time.

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.

These two things are an ABSOLUTE MUST, anything short of this early on in the process is a waste of everyone's time.

 

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  Info about the author:

 George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

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 Info about the author:

George Souto NMLS# 65149 is a Loan Originator who is licensed in #CT, #RI, #MA, #NH, & #FL and can assist you with all your #FHA, #Conventional, #VA, #USDA, and #State Bonded Progam #mortgage needs in #CT, #RI, #MA, #NH, & #FL. George resides in Middlesex County which includes #Middletown, #Old Saybrook, #Middlefield, #Durham, #Cromwell, #Portland, #Higganum, #Haddam, #East Haddam, #Moodus, #Chester, #Deep River, and #Essex. George can be contacted at (860) 573-1308 or souto@snet.net

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Re-Blogged 12 times:

Re-Blogged By Re-Blogged At
  1. BRAD NEWTON-Pittsford NY- CBR®-SFR®-SRES®-Lic. R.E. Salesperson 05/29/2012 04:42 AM
  2. Robert L. Brown 05/29/2012 08:46 AM
  3. Ralph Janisch ABR CRS Broker 05/29/2012 08:54 AM
  4. 1~Judi Barrett 05/29/2012 10:28 AM
  5. Barbara Altieri 05/29/2012 10:45 AM
  6. Barbara Murphy 05/30/2012 02:49 AM
  7. Karen Steed 05/30/2012 04:43 AM
  8. Amanda S. Davidson 05/30/2012 08:39 AM
  9. Gene Riemenschneider 05/31/2012 12:35 PM
  10. Gabe Sanders 06/03/2012 09:10 PM
  11. Katerina Gasset 06/08/2012 02:44 PM
  12. Debbie Reynolds 06/16/2012 08:44 AM
Topic:
Mortgage / Finance
Location:
Connecticut
Groups:
Realtors®
Mortgages
1st Time Buyers
Real Estate Rookie
Be The Best In Your Field
Tags:
credit scores

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Rainmaker
219,095
Judy Orr
HomeSmart Realty Group - Orland Park, IL
SW & Near West Chicago suburbs
I had a buyer that was shopping around online for a mortgage but when it came time to apply when she found a home her score dropped 20 points, pushing her under qualification. Her new, local loan officer told her that was the reason & told her to wait a month & it should come back up. Supposedly, one of the sites she was on sent her info out to around 8 different places, who all pulled her credit. Thankfully, this was when homes were sitting & the home she wanted was still available. Waiting a month did the trick & her score popped back up & she was OK. I've been told about time frames where credit scores shouldn't be affected & I'm really not sure how many other loan officers she went to & the true time period for her, but this was surprising.
May 30, 2012 06:02 AM #61
Rainer
138,732
Sam Kader MLO 130505 MB 78982
Pacific Coast Financial LLC Lic# MB78982 - Seattle, WA
Real Estate NMLS 91980 Mortgage Broker Lic MB78982

Good posting George. Lately, I also request for a complete copy of their tax returns. Unreimbursed Employee Expense is another culprit to watch out for.

May 30, 2012 07:11 AM #62
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John DL Arendsen
CREST BACKYARD HOMES, ON THE LEVEL GENERAL & FACTORY BUILT HOME CONTRACTOR, TAG REAL ESTATE SALES & INVESTMENTS - Leucadia, CA
Crest Backyard Homes "ADU" dealer & Contractor

OK, I can certainly understand what you're saying, however, I was also of the impression that the more you had your credit pulled the more concerned a potential lender may become as to why you're having it pulled so much. I've always heard that it was a red flag.

May 30, 2012 08:18 AM #63
Rainmaker
1,523,197
Amanda S. Davidson
Amanda Davidson Real Estate Group Brokered By eXp Realty - Alexandria, VA
Alexandria Virginia Homes For Sale

George- Great post! I've learned those that kick and scream about getting pre-approved aren't serious or know they have bad credit. It's a red flag. I always thought it was 30 days so I'm glad you noted it's 14. I'm going to re-blog.

May 30, 2012 08:37 AM #64
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

If a prospective buyer will not permit a loan officer to pull and review their credit report, that loan officer can do nothing for them AND NEITHER CAN I.

 

May 30, 2012 08:48 AM #65
Rainmaker
579,727
Chris Smith
Re/Max Chay Realty Inc., Brokerage - New Tecumseth, ON
South Simcoe, Caledon, King, Orangeville Real Esta

George thank you for clearing up some muddy waters for me, so that I might properly inform buyers

May 30, 2012 08:48 AM #66
Rainmaker
542,419
Jon Quist
REALTY EXECUTIVES TUCSON ELITE - Tucson, AZ
Tucson's BUYERS ONLY Realtor since 1996

Both scenarios you use are good ones. The first LO is trying to inhibit the competition, and the second one is the guy trying to hide crummy credit. Does he think he can even begin to be approved without a credit check? Jeez.

May 30, 2012 11:24 AM #67
Rainmaker
1,431,210
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

Great post.  Comparing loans is hard and some play upon the fears of buyers.  Sometimes you need several quotes just to find the right loan and because a bank requires a loan approval from them.

May 30, 2012 02:27 PM #68
Rainmaker
843,457
Bob Miller
Keller Williams Cornerstone Realty - Ocala, FL
The Ocala Dream Team

Hi George, excellent post.  I have heard a buyer can have up to four pulls before it affects their score.  True?

May 30, 2012 08:12 PM #69
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Bob, there is no limit on the number of credit pulls that are done within 14 days from start to finish.  However, a Borrower should limit the number of Lenders that they give their personal information to, to those that they are actually considering doing their mortgage with. 

May 30, 2012 10:08 PM #70
Rainer
46,149
Heather Milbourn
South Beaches Real Estate Professional - Seminole, FL

I was with a buyer last night who said the same thing so great info about the 14 days thank you

May 30, 2012 10:59 PM #71
Rainmaker
1,317,551
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

George -- this does come up quite often.  The problem some buyers have run into is loan originator #1 pulls credit and tells borrower don't let anyone else pull you credit.. The meet with me and I am not at all happy with lender 1 (I won't go into details on a public forum).. and I recommend another loan originator some 30 days later.. how much of an impact on the credit score will that have --- assuming NOTHING has changed.

May 31, 2012 12:46 PM #72
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Joan, I don't know the exact point impact, but it is minimal.  However, after 30 days Creditors are bound to have reported to the Credit Bureaus again, and what they report and transpired during those 30 days could have a noticeable change. 

So the pull in of itself will have little impact, but what the Creditors report could be significant especially if the Borrower, had a late payment or maxed out a card.  But the opposite could also be true, if they lowered the balance on their credit cards during that time, and the Creditor reported it.

May 31, 2012 01:08 PM #73
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Emily Medvec Qualifying Broker
Hello Realty - Santa Fe, NM
Realtor | Serving Santa Fe & Northern NM

George, congratulations on this feature. We also advice our sellers to pull their credit if they expect to purchase another home after we sell their home. In today's new normal landscape of real estate, without knowing your buying power with a stamp of approval from lender, there is no reason to think you can purchase a home.

Jun 01, 2012 12:01 PM #74
Rainmaker
1,320,531
Nick T Pappas
Assoc. Broker/Broker ABR, CRS, SFR, e-Pro, @Homes Realty Group, @HomesBirmingham & Providence Property Mgmnt, LLC Hun... - Huntsville, AL
Madison & Huntsville Alabama Real Estate Resource

George, just had to come back again...this topic keeps coming up with clients...had this conversation twice today.

Jun 02, 2012 10:17 AM #75
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Katerina Gasset
Get It Done For Me Virtual Services - Wellington, FL
Get It Done For Me Virtual Services

George- Great article worthy of a re-blog. 

Ron- #50- Can't you just move here to Florida to work with the buyers here? It was great speaking to you a few weeks ago. I am very impressed in your over delivering. We can not seem to find one mortgage broker here in our area who is willing to work for the customers. 

Jun 08, 2012 02:50 PM #76
Rainer
194,497
Stephanie Stringer
First Choice Loan Services NMLS#210764 - San Antonio, TX
Mortgage Loan Originator

George-  I found your blog through Nestor and Katerina.  You hit this bullet point right one.  I get tired of hearing, I want to get pre-approved with you put don't pull my credit.  It's either the scare tatic or the client is afraid of their 500 score dropping more.   Best of luck to you!

Jun 08, 2012 02:57 PM #77
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Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Came from Katerina's reblog.

I have seen cases where the mortgage brokers says they would do it, and then they say they couldn't and it is beyond the 14-day point.

Jun 08, 2012 03:10 PM #78
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Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

George, interesting to know that some buyers still feel it that way. Part of my buyer consultation does mention that it is REQUIRED that they get the pre-approval and yes, the lender will surely pull their credit. And good to know (from Katerina's re-blog) that it's a 14-day period...

Jun 08, 2012 03:38 PM #79
Rainer
55,010
Jairo Arreola #SOLDBYVETERAN
PRG Real Estate - San Jose, CA
VA Home Loan Specialist - SF Bay Area

Great Info on issues with credit. Many people are unaware of this. Thanks for the info!

Jun 14, 2012 03:07 PM #80
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