Having your credit run

Buying & Selling Real Estate
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Having your credit run

Blair Colsey
New to Real Estate · Broomfield, CO · Member since 2017 · 23 posts · 13 votes

Hi All,

Perhaps a silly question for the group but I wanted to get everyone's take on the impact of having your credit run. Obviously a big part of investing is working with different lenders and each one needs to run your credit (sometimes multiple time) in order to approve you for loans. Historically, I've always been cautious about who I let run my credit because I know having a ton of hard hits will negatively affect your score. I usually try to get as much info from each institution as possible before I let them run it so I am 99% sure I'll be approved before I give them the green light but this creates a bunch of extra work on my end. If this isn't as much of a concern as I'm making it out to be, I could just apply for loans at a bunch of different places and just see what offers come back. Does anyone else have this concern? Does everyone else just have hundreds of credit checks on their profile so it doesn't matter anymore? Any thoughts would be appreciated.

Thanks,

Blair

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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
7y

Mortgage lender credit inquiries, within a 30 day window are grouped together for scoring purposes as if they were 1 single inquiry.

Even besides that, if you have good credit....inquiries simply dont matter enough to make a difference. For people with bad credit, then the couple point drop might be meaningful.

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    7y

    Mortgage lender credit inquiries, within a 30 day window are grouped together for scoring purposes as if they were 1 single inquiry.

    Even besides that, if you have good credit....inquiries simply dont matter enough to make a difference. For people with bad credit, then the couple point drop might be meaningful.

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group546 Reviews
    WebsiteView Page
    3Reply
  • Jason D.
    Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes
    7y
    @Blair Colsey it just part of the game. I'm still new enough that I'm not able to buy with cash, and use credit cards to fund rehabs (more for the perks than the lack of cash) so my credit can move by 100 points or more throughout the process. It doesnt bother me much because I know that at the end of it all, it'll be back to where it needs to be.
    1Reply
  • Blair Colsey
    OP
    New to Real Estate · Broomfield, CO · Member since 2017 · 23 posts · 13 votes
    7y

    @Jason D. @Russell Brazil thank you both for your responses. That makes sense to me. So basically the advice is "don't worry about it"? I was aware that multiple hits within a given time frame would be counted as one but even with that in mind, some of the people on here are buying 20+ properties a year so they must have close to 100 hits to their credit assuming they shop around for lenders before purchasing each one. I guess the credit inquiry part of their score is not weighted as heavily as other factors so it doesn't matter?

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  • Michael Noto
    Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
    7y

    @Blair Colsey If you get to the point where you scale and start doing several projects a year, odds are your hard money lender/private lender will not run your credit to approve every loan once you are established with them.

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  • Mat Robison
    Member since 2019 · 1 post · 1 vote
    7y

    It really depends on how these “20+” deals a year are funded... really multiple inquires (outside that 30 day window) usually only change things a few points. It’s other factors that are going to affect your score, like age of credit history, credit utilization, etc.  Yes, there will be short-term consequences, but honestly, like you mentioned, “don’t worry about it.” 

    You'll thank yourself in 5 years when you have the extra income from REI.

    1Reply
  • Jason D.
    Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes
    7y
    @Blair Colsey the people buying that many properties are, more than likely, not using traditional lenders that are pulling credit. They're using cash, private lenders, and creative financing. That a whole different ballgame than you and I are in right now 😁
    1Reply
  • Nghi Le
    Investor / Lender · Seattle, WA · Member since 2014 · 1k+ posts · 730 votes
    7y

    What kind of lenders are you talking about?  Long-term financing, like banks?  In that case, it's unavoidable.  But as long as you keep your score above mid-700s, you should be fine.  I get my credit pulled at least a dozen times a year, but it's a small price to pay for getting the cheapest loans.  What else are you using your credit for? :-)

    If you're talking about hard money, short-term financing, then it can be avoided.  Most of them have a "Line of Credit program", which essentially means you're pre-approved with them and they don't have to run credit and ask for full set of docs for up to 6-12 months.  Some lenders also don't do credit pulls, or they only do soft pulls, but this seems to be a minority.

    Your other option is to work with a broker for your loan needs.  That would avoid you going out to multiple lenders and applying for financing to "try them out."

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