Hard vs Soft Credit Pulls,
Mortgage Rates

So you plan to buy a home.  Let’s take a few minutes to understand the latest in credit scoring, and how it affects your interest rate.

 

The two main companies that produce and maintain credit scoring models are FICO and Vantage Score.  There are many versions of FICO Scores.  The most recent version is FICO 10.   Mortgage lenders most commonly use FICO, Score 2, 4 or 5.

 

Most mortgage lenders require FICO scores from all 3 major bureaus (Experian, TransUnion, and Equifax) and will use the mid-score to determine your loan product and interest rate eligibility.

 

There are two types of credit inquiries – a hard pull, and a soft pull.   A hard pull represents a formal application of credit, such as a mortgage, auto loan, or credit card,  and it may impact your credit scores and stay on your credit reports for about two years.   A soft pull is primarily for informational purposes (e.g., employer credit check or your own credit monitoring), or loan preapproval. 

 

When you work with a wholesale mortgage broker like Abundance, we will do a soft pull first.   We take that soft pull credit report to 20+ wholesale lenders, to find you the best loan option while protecting your credit scores.   Once you are in contract for your purchase and are ready to finalize your loan selection, then we will do a hard pull to submit to your chosen lender. 

 

This is the most efficient and effective way to find you the best loan product, save you time, and protect your credit scores from multiple, repeated credit inquiries.

 

The scores your lender sees will likely be lower than what you see on the credit monitoring apps.  If your scores are on the borderline, we have ways to improve your credit scores before moving forward with a formal loan application.  We can also help with Rapid Rescoring to expedite a lender's mortgage approval process.

 

Have questions?  Schedule a call with us to discuss your personal situation.