Shopping for Loans While Avoiding Impact to Personal Credit Score

[John Jacobus]

I'm looking for best practices to employ while shopping for mortgage loans for investment properties (small multi-family and SFR). My standard approach is to pursue 3-4 lenders when applying for a mortgage. I typically select the one with the most favorable rates and terms.

The problem with this approach is that it results in 3-4 credit inquiries on my credit report, which negatively impacts my credit score and results in higher rates and/or points than I normally would have obtained had I only pursued one lender.

I'm curious if others have experienced this issue and have employed successful workarounds to avoid multiple credit inquiries during the loan shopping process.  For example, in theory I could make a personal request for my credit report from all three bureaus and provide these copies to all lenders.  This would result in no credit inquiries and no negative impacts to my credit report.  Has anyone been successful with this approach?  What other methods have worked?

I appreciate any insight or recommendations you can share.  

[Matt J.]

Hello John -

This question seems to be asked fairly often. I'll address a couple of your questions.

Pulling your own credit report wont give you the same score that the mortgage lenders are going to see when they pull your credit. The reason for this is there are diffrent score models for diffrent industries, auto, insurance, mortgage, consumer, etc. When you pull your own credit you will get a consumer credit score NOT a mortgage score. Consumer scores are almost always coniderably higher than mortgage scores. I've seen many upset borrowers in front of thier loan officer wanting to know when the score they have on thier mortgage credit report is so much lower than what you pulled yourself.

Richard mentioned that the inquiry will only cost you 5 points. This may or may not be true. FICO does not disclose their score model and how many points an inquiry COULD cost you. FICO will look at your overall credit profile and base any deduction, if any, off your overall picture. I've seen mortgage inquires have zero affect on borrowers.

Shawn hit the nail on the head mortgage inquires during a specific time frame will only count once although they will show each time.

Here is a link to thread where I just addressed this.

https://www.biggerpockets.com/forums/311/topics/310884-credit-run-buy-unknown-sources-multiple-times

For more info I'd suggest checking out myfico.com