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.
- Lot Size2.86 acHome Size2,099 sq ftBeds3 bedsBaths4 bathsYear Built2003Days on Market2
- Lot SizeN/AHome Size935 sq ftBeds1 bedBaths1 bathYear Built0Days on Market2
- Lot Size12.37 acHome Size2,217 sq ftBeds2 bedsBaths3 bathsYear Built1980Days on Market4
- Lot Size1.53 acHome Size1,582 sq ftBeds2 bedsBaths3 bathsYear Built1966Days on Market5
- Lot Size11,090 sqftHome Size1,000 sq ftBeds2 bedsBaths2 bathsYear Built1968Days on Market5
- Lot Size2.82 acHome Size1,855 sq ftBeds2 bedsBaths3 bathsYear Built1999Days on Market5
- Lot Size2.86 acHome Size946 sq ftBeds1 bedBaths1 bathYear Built2003Days on Market6
- Lot Size1.83 acHome Size1,740 sq ftBeds2 bedsBaths2 bathsYear Built2008Days on Market6
- Lot Size12.68 acHome Size1,398 sq ftBeds2 bedsBaths2 bathsYear Built1974Days on Market6
- Lot Size1.83 acHome Size1,640 sq ftBeds2 bedsBaths2 bathsYear Built2008Days on Market7
- Lot Size4.39 acHome Size1,627 sq ftBeds2 bedsBaths2 bathsYear Built1974Days on Market7
- Lot Size3,153 sqftHome Size4,500 sq ftBeds4 bedsBaths4 bathsYear Built2012Days on Market8
- Lot Size3,149 sqftHome Size1,662 sq ftBeds3 bedsBaths2 bathsYear Built1911Days on Market9
- Lot Size1.36 acHome Size1,360 sq ftBeds3 bedsBaths3 bathsYear Built2004Days on Market11
- Lot Size12.68 acHome Size1,544 sq ftBeds2 bedsBaths3 bathsYear Built1974Days on Market11
- Lot Size1.36 acHome Size880 sq ftBeds1 bedBaths2 bathsYear Built2007Days on Market13
- Lot Size31,646 sqftHome Size1,735 sq ftBeds2 bedsBaths3 bathsYear Built2006Days on Market13
- Lot Size11,329 sqftHome Size1,340 sq ftBeds2 bedsBaths2 bathsYear Built2011Days on Market14
- Lot Size33,902 sqftHome Size2,010 sq ftBeds3 bedsBaths2 bathsYear Built2010Days on Market14
- Lot Size31,646 sqftHome Size2,904 sq ftBeds2 bedsBaths3 bathsYear Built2006Days on Market15
- Lot Size31,646 sqftHome Size1,795 sq ftBeds2 bedsBaths2 bathsYear Built2006Days on Market15
- Lot Size2.86 acHome Size1,481 sq ftBeds2 bedsBaths3 bathsYear Built2003Days on Market16
- Lot Size3,641 sqftHome Size4,605 sq ftBeds5 bedsBaths6 bathsYear Built1987Days on Market16
- Lot Size2.86 acHome Size1,631 sq ftBeds2 bedsBaths3 bathsYear Built2003Days on Market16
- Lot Size2.86 acHome Size928 sq ftBeds1 bedBaths2 bathsYear Built2003Days on Market16
- Lot Size2.86 acHome Size1,088 sq ftBeds1 bedBaths2 bathsYear Built2003Days on Market16
- Lot Size1.70 acHome Size1,582 sq ftBeds2 bedsBaths3 bathsYear Built1966Days on Market19
- Lot Size9,112 sqftHome Size4,000 sq ftBeds5 bedsBaths4 bathsYear Built1971Days on Market19
- Lot Size31,646 sqftHome Size1,714 sq ftBeds2 bedsBaths2 bathsYear Built2006Days on Market19
- Lot Size2.82 acHome Size1,945 sq ftBeds2 bedsBaths3 bathsYear Built2000Days on Market19
- Lot Size17,863 sqftHome Size1,340 sq ftBeds2 bedsBaths3 bathsYear Built1967Days on Market21
- Lot Size1.53 acHome Size1,456 sq ftBeds2 bedsBaths3 bathsYear Built1966Days on Market21
- Lot Size12.68 acHome Size1,866 sq ftBeds2 bedsBaths3 bathsYear Built1974Days on Market22
- Lot Size31,646 sqftHome Size1,679 sq ftBeds2 bedsBaths3 bathsYear Built2006Days on Market22
- Lot Size5,884 sqftHome Size4,146 sq ftBeds4 bedsBaths5 bathsYear Built2013Days on Market34
- Lot SizeN/AHome SizeN/ABeds1 bedBaths1 bathYear Built0Days on Market40
- Lot Size2.86 acHome Size1,431 sq ftBeds2 bedsBaths3 bathsYear Built2003Days on Market42
- Lot Size2.41 acHome Size1,650 sq ftBeds3 bedsBaths3 bathsYear Built1978Days on Market47
- Lot SizeN/AHome Size1,422 sq ftBeds2 bedsBaths2 bathsYear Built1972Days on Market54
- Lot Size1.83 acHome Size1,640 sq ftBeds2 bedsBaths2 bathsYear Built2008Days on Market54
- Lot Size2.86 acHome Size859 sq ftBeds1 bedBaths1 bathYear Built2003Days on Market54
- Lot Size2.86 acHome Size859 sq ftBeds1 bedBaths1 bathYear Built2003Days on Market57
- Lot Size1,868 sqftHome Size1,722 sq ftBeds3 bedsBaths5 bathsYear Built0Days on Market58
- Lot Size31,646 sqftHome Size2,509 sq ftBeds2 bedsBaths3 bathsYear Built2006Days on Market63
- Lot Size8,515 sqftHome Size3,237 sq ftBeds3 bedsBaths3 bathsYear Built2000Days on Market65
- Lot SizeN/AHome Size935 sq ftBeds1 bedBaths1 bathYear Built1972Days on Market67
- Lot Size39,561 sqftHome Size1,070 sq ftBeds1 bedBaths1 bathYear Built2008Days on Market70
- Lot Size5,627 sqftHome Size1,838 sq ftBeds4 bedsBaths3 bathsYear Built1967Days on Market75
- Lot Size3,136 sqftHome Size3,891 sq ftBeds4 bedsBaths4 bathsYear Built1989Days on Market76
- Lot Size9,269 sqftHome Size2,315 sq ftBeds2 bedsBaths3 bathsYear Built1976Days on Market77
See all Real estate matching your search.
(all data current as of 1/22/2019)
Listing information deemed reliable but not guaranteed. Read full disclaimer.
- Ten Tips to Improve your Credit Score – Marina del Rey Real Estate
- FHA Mortgage Price Hike Hits Borrowers – Marina del Rey Real Estate
- Qualifying for a Mortgage will be Harder in 2014 So Refinance Now – Marina del Rey Real Estate
- Marina del Rey Silver Strand CC & R’s – HOA Documents for the Neighborhood – Marina del Rey Real Estate
- Marina del Rey’s Oxford Retention Basin Multi-Use Enhancement Project
- Howard Hughes and the History of the Marina City Club – Marina del Rey Condos
- Marina del Rey’s Esprit Apartment Complex Sells for $225 million – 13900 Marquesas Way
- Marina Del Rey Holiday Boat Parade hosted by Kerry Walsh Jennings – 50th Year Anniversary – Burton Chase Park – Marina del Rey