When I met with a borrower a few months ago to discuss a prequalification, we ran his credit and he had a 680 credit score – very workable. He was not ready to take the leap towards home purchase just then, and wanted to wait a few months. Received a call this morning that he wanted to be ready to go at the start of the New Year and could he come in to make sure all was in order. Absolutely!
Credit reports expire after 90 days, so we needed to pull up new credit. I almost wish we hadn’t. His score had dropped by 60 points. Arrrgh! He had gone to purchase a car (but did not), and between two dealerships, his credit was run 28 times. This borrower can still get a loan, however, credit score has a direct impact on the rate a borrower will receive. He will now get a higher rate.
I wish I could say I have not seen this before, however, I have. It seems that the car dealerships shop to a number of banks, but do not use the same credit report, each lender pulls their own. While you are sitting there waiting for the Sales Representative to come back with your numbers, the finance staff is in the back room running the heck out of your credit.
Hindsight is always 20/20. Rule of thumb when you are purchasing a home FREEZE YOUR CREDIT. Do not change a thing, it will pay for itself in the long run.
