Can a borrower have multiple credit inquiries without hurting their FICO score?
This question regarding credit inquiries is one that I receive all the time from borrowers and agents alike. Rightfully so, the borrower should be able to shop lenders for the best available rates and services. FICO scores play a big role in borrower’s ability to secure affordable financing. Too many hard credit pulls lowers credit scores. It is certainly a logical question – how does a borrower shop lenders when each lender needs a credit pull in their name?
Actually, there are laws in place to protect the consumer who wants to shop around for the best mortgage rate.
Credit bureaus don’t ding you for “too many credit inquiries” when you shop for a mortgage.
The good news is this. A borrower can pull a tri-merge credit report multiple times in the same 45-day period. Click on the article above for more details. Rest assured, you have the ability to have multiple lenders pull your credit so you can shop for the best financing for your personal situation.
According to the Consumer Federal Protection Bureau (CFPB), the impact on your credit is the same regardless of the number of inquiries, as long as the inquiries are made by mortgage brokers or lenders within a 45-day window.
However, it’s important to note that some companies are still using older FICO models. These older FICO models allow for just 14 days for multiple inquires to have the impact of just one.
For this reason, a good rule of thumb is to try to limit your credit pulls for rate shopping to two weeks.
Seeking too much credit in a short period does, however, drag down your credit score. A lower credit score typically means a higher interest rate, and a harder time getting a mortgage.
For most people, though, a credit inquiry affects their credit scores by less than 5 points.
As always make sure you get the best advice possible from qualified real estate professionals, lenders, and financial advisors.
