Will Multiple Credit Inquiries Hurt FICO scores? Marina del Rey Real Estate

Fair Isaac Corp., developer of the FICO score, has protections in place to avoid lowering the scores of people shopping for mortgages, but these aren’t always effective.

WASHINGTON — In a marketplace where lenders are demanding record-high FICO credit scores — Fannie Mae and Freddie Mac are averaging around 760 on approved mortgages this year — are you a little fuzzy about what can push your scores up or down?

Take inquiries, which Fair Isaac Corp., the developer of the score methodology dominant in the mortgage field, says are among the most widely misunderstood components of its system. Do multiple inquiries — requests by lenders and others to pull your national credit bureau reports — knock your score down? Do you know whether your lender is entering the correct code to minimize damage to your score when you’re shopping for a mortgage and generating lots of inquiries? If you’re young or otherwise new to the world of credit, could multiple inquiries do enough damage to prevent you from getting approved for a home purchase?

Given the importance of maintaining high scores, FICO senior scientist Frederic Huynh agreed to run through the key rules governing how inquiries affect home buyers and mortgage applicants.

Start with the basics: Yes, racking up large numbers of inquiries can lower your score. The FICO models consider them significant because extensive behavioral research has shown that “consumers who are seeking new credit accounts are riskier,” more prone to defaults, Huynh said.

“Statistically people with six or more inquiries on their credit reports can be up to eight times more likely to declare bankruptcy than people with no inquiries on their reports,” he said. So inquiries do matter.

  • But this doesn’t mean that if you’re shopping for a home loan or refinancing, and six lenders pull your credit reports, that you’re going to be hit with six separate inquiries and have your score lowered. The FICO models, Huynh said, ignore all mortgage-related inquiries during the 30 days immediately preceding the computation of the score. All mortgage inquiries during the 45 days preceding your loan application count only as a single inquiry. The same buffer zones cover shopping for auto loans and student loans — but no other forms of credit.

In any event, Huynh said, a single inquiry usually is not a big deal, knocking less than 5 points off your score per pop. But experts in the credit-reporting field say that despite FICO’s good intentions, bad things can happen on inquiries. This is especially true for people with thin credit files, such as young, first-time home buyers and others without extensive credit histories.

Larry Nelson, owner of KCB Information Services in Pekin, Ill., a credit reporting agency active in the mortgage field, said a recent applicant lost her pre-approved home loan at closing because five new inquiries for an auto loan suddenly appeared on her credit reports. This deflated her FICO score to 610 — a loss of 30 points — and put her below the minimum score required for the mortgage.

How could this happen, since auto loans are one of the three protected classes of credit where multiple inquiries within a short time period are OK? According to Nelson, unless loan officers properly code the purpose of the inquiry when they report it to the national credit bureaus — an auto loan in this case — it won’t necessarily be identified in credit files that way.

Nelson’s home buyer had double bad luck: None of the inquiries that should have been covered by the 30-day buffer carried the correct purpose identification. Plus Fannie Mae and Freddie Mac have begun requiring lenders to pull a second set of credit reports immediately before closing to ensure that applicants’ FICO scores haven’t changed significantly. In this case, there was a sudden increase in score-injuring inquiries in the bureaus’ files, and the buyer couldn’t close on the loan.

Nelson said glitches like this “are becoming more commonplace” and can hurt unwary consumers. He strongly urged mortgage applicants to avoid all credit-related shopping — for credit cards, furniture, home improvements, you name it — in the weeks before their closing because a string of inquiries can knock the home purchase off track or delay it.

Of course, not all inquiries indicate active credit seeking, Huynh said, even though your files are accessed. For example, if you’re checking on your credit before applying for a mortgage — either throughhttp://www.annualcreditreport.com, where reports are free once a year — or by simply buying them from Equifax, Experian or TransUnion, your FICO score goes untouched.

Distributed by Washington Post Writers Group.

  1. 3 beds, 4 full baths
    Home size: 4,236 sq ft
    Lot size: 3,659 sqft
    Year built: 1991
    Parking spots: 6
    Days on market: 2
  2. 2 beds, 2 full baths
    Home size: 1,138 sq ft
    Days on market: 3
  3. 2 beds, 2 full baths
    Home size: 1,050 sq ft
    Year built: 2016
    Days on market: 3
  4. 2 beds, 2 full baths
    Days on market: 3
  5. 4 beds, 6 full baths
    Home size: 6,539 sq ft
    Lot size: 4,634 sqft
    Year built: 1989
    Days on market: 4
  6. 3 beds, 4 full baths
    Home size: 3,140 sq ft
    Lot size: 27,349 sqft
    Year built: 2010
    Days on market: 5
  7. 3 beds, 2 full, 1 half baths
    Home size: 2,562 sq ft
    Lot size: 2,992 sqft
    Year built: 1997
    Parking spots: 2
    Days on market: 5
  8. 1 bed, 1 full, 1 half baths
    Home size: 1,080 sq ft
    Lot size: 1.36 ac
    Year built: 2007
    Days on market: 6
  9. 2 beds, 2 full baths
    Home size: 1,540 sq ft
    Lot size: 39,561 sqft
    Year built: 2008
    Days on market: 6
  10. 2 beds, 2 full baths
    Home size: 1,300 sq ft
    Lot size: 1.83 ac
    Year built: 2008
    Parking spots: 4
    Days on market: 7
  11. 1 bed, 1 full bath
    Home size: 1,776 sq ft
    Lot size: 1.06 ac
    Year built: 2007
    Days on market: 7
  12. 3 beds, 1 full, 1 three-quarter baths
    Home size: 1,722 sq ft
    Year built: 1972
    Days on market: 8
  13. 2 beds, 1 full, 1 three-quarter, 1 half baths
    Home size: 1,547 sq ft
    Lot size: 8.95 ac
    Year built: 1975
    Parking spots: 4
    Days on market: 9
  14. 2 beds, 2 full baths
    Home size: 1,419 sq ft
    Lot size: 4.39 ac
    Year built: 1974
    Days on market: 9
  15. 2 beds, 2 full baths
    Home size: 1,650 sq ft
    Lot size: 6,104 sqft
    Year built: 1972
    Days on market: 9
  16. 2 beds, 2 full, 1 half baths
    Home size: 2,652 sq ft
    Year built: 1972
    Days on market: 9
  17. 2 beds, 1 full, 1 three-quarter baths
    Days on market: 9
  18. 2 beds, 2 full baths
    Home size: 1,484 sq ft
    Lot size: 1.83 ac
    Year built: 2008
    Days on market: 14
  19. 3 beds, 3 full baths
    Home size: 2,392 sq ft
    Lot size: 13,757 sqft
    Year built: 2013
    Days on market: 16
  20. 4 beds, 2 full, 1 half baths
    Home size: 3,095 sq ft
    Lot size: 2,817 sqft
    Year built: 1989
    Days on market: 19
  21. 2 beds, 2 full, 1 half baths
    Home size: 1,447 sq ft
    Lot size: 2.86 ac
    Year built: 2003
    Days on market: 19
  22. 4 beds, 2 full, 3 three-quarter, 2 half baths
    Home size: 5,051 sq ft
    Lot size: 3,149 sqft
    Year built: 2002
    Days on market: 19
  23. 2 beds, 2 full, 1 half baths
    Home size: 2,354 sq ft
    Lot size: 31,647 sqft
    Year built: 2006
    Days on market: 23
  24. 3 beds, 1 full, 2 three-quarter, 1 half baths
    Home size: 3,861 sq ft
    Lot size: 4,508 sqft
    Year built: 1985
    Parking spots: 6
    Days on market: 26
  25. 5 beds, 5 full, 1 half baths
    Home size: 4,749 sq ft
    Lot size: 3,144 sqft
    Year built: 1998
    Days on market: 26
  26. 3 beds, 4 full baths
    Home size: 2,356 sq ft
    Lot size: 5,260 sqft
    Year built: 2005
    Days on market: 26
  27. 2 beds, 2 full baths
    Home size: 1,680 sq ft
    Lot size: 1.83 ac
    Year built: 2008
    Days on market: 27
  28. 1 bed, 2 full baths
    Home size: 1,220 sq ft
    Lot size: 21,011 sqft
    Year built: 2006
    Days on market: 28
  29. 2 beds, 2 full baths
    Home size: 1,929 sq ft
    Lot size: 5.96 ac
    Year built: 1981
    Days on market: 30
  30. 2 beds, 2 full baths
    Home size: 1,456 sq ft
    Lot size: 6,075 sqft
    Year built: 1974
    Days on market: 33
  31. 2 beds, 2 full, 1 quarter baths
    Home size: 2,354 sq ft
    Lot size: 31,647 sqft
    Year built: 2006
    Days on market: 37
  32. 3 beds, 2 full, 1 half baths
    Home size: 2,200 sq ft
    Lot size: 4.39 ac
    Year built: 1974
    Days on market: 40
  33. 3 beds, 2 full baths
    Home size: 1,722 sq ft
    Days on market: 40
  34. 2 beds, 2 full baths
    Home size: 1,178 sq ft
    Year built: 2016
    Days on market: 42
  35. 1 bed, 2 full baths
    Home size: 1,360 sq ft
    Lot size: 21,011 sqft
    Year built: 2006
    Parking spots: 4
    Days on market: 43
  36. 2 beds, 2 full baths
    Home size: 1,640 sq ft
    Lot size: 1.83 ac
    Year built: 2008
    Days on market: 43
  37. 3 beds, 3 full, 1 half baths
    Home size: 4,250 sq ft
    Lot size: 3,845 sqft
    Year built: 2002
    Days on market: 44
  38. 2 beds, 2 full baths
    Home size: 1,714 sq ft
    Lot size: 31,647 sqft
    Year built: 2006
    Days on market: 50
  39. 2 beds, 3 full baths
    Home size: 1,926 sq ft
    Lot size: 13,172 sqft
    Year built: 1971
    Parking spots: 4
    Days on market: 51
  40. 5 beds, 4 full, 1 three-quarter, 1 half baths
    Home size: 5,034 sq ft
    Lot size: 2,890 sqft
    Year built: 2000
    Parking spots: 6
    Days on market: 58
  41. 3 beds, 2 full, 1 half baths
    Home size: 2,331 sq ft
    Lot size: 2.86 ac
    Year built: 2003
    Days on market: 61
  42. 2 beds, 2 full, 1 half baths
    Home size: 1,900 sq ft
    Lot size: 16,934 sqft
    Year built: 1978
    Days on market: 63
  43. 2 beds, 2 full, 1 half baths
    Home size: 1,473 sq ft
    Year built: 2016
    Days on market: 65
  44. 3 beds, 3 full baths
    Home size: 3,237 sq ft
    Lot size: 8,517 sqft
    Year built: 2000
    Days on market: 68
  45. 3 beds, 1 full, 1 three-quarter baths
    Home size: 1,722 sq ft
    Year built: 1972
    Days on market: 68
  46. 2 beds, 2 full baths
    Home size: 1,422 sq ft
    Year built: 1978
    Parking spots: 2
    Days on market: 68
  47. 2 beds, 2 full baths
    Home size: 1,533 sq ft
    Lot size: 31,647 sqft
    Year built: 2006
    Days on market: 70
  48. 4 beds, 3 full, 1 half baths
    Home size: 3,875 sq ft
    Lot size: 3,746 sqft
    Year built: 1986
    Days on market: 70
  49. 3 beds, 3 full baths
    Home size: 2,300 sq ft
    Lot size: 7,446 sqft
    Year built: 1971
    Days on market: 96
  50. 1 bed, 2 full baths
    Home size: 1,428 sq ft
    Lot size: 2.86 ac
    Year built: 2003
    Days on market: 98

See all Real estate in the city of Marina Del Rey.
(all data current as of 5/24/2017)

Listing information deemed reliable but not guaranteed. Read full disclaimer.

kenharney@earthlink.net

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