01-21-2013 01:21 PM
In November or December I went to Wells Fargo hoping to qualify for a home loan. I did not at the time but I found some errors on my credit. The LO thought getting these corrected and doing a rapid re-score would raise my score enough to qualify. Well it didn't. She suggested paying down the balances on my credit card and the credit line on my checking account when I get my tax refund and maybe trying again in April or May. Will new inquiries this soon take away the improvement I will (hopefully) have in my scores? My best score would qualify as of right now but of course they take your middle score, which is 11 points short of where it needs to be.
EQ 676, TU 614, EX 629
01-21-2013 01:39 PM
New inquiries will have a negative effect, with how much depending on factors known only to the FICO scoring gods. Probably less that 10 pts.
Apparently, the inquiries are intended to secure new credit, which is intended to provide quick score increase.
It may, in fact, have other adverse effects beyond just new inquiries. If approved for a new line of credit, it will enter your scoring with an age of zero, thus necessarily lowering your average age of accounts. If the new account adds a substantil new CL, it may improve your % util, but with the new credit offsets of inquiries and reduced AAoA.
Hard to say how it will shake out in the short term.
It is conventional wisdom that apping for new credit while in the process of mortgage approval is usually not wise.
01-21-2013 03:18 PM
There are many LO's and Brokers that really have no clue about credit. But they sure do want you to believe they do.
When they pull your Tri-Merge report, it gives them an idea of how much your scores could possibly increase.
The credit report pulled for mortgage, will ding your scores. When you apply again, few months down the road they will ding your score again. How much these dings cost you is more of a guessing game, but usually is only a few points. YMMV
01-21-2013 07:40 PM
Thats okay what I said still holds true.... If you reapply a few months down the road you will be dinged again.
When applying for a mortgage and rate shopping you may go to several lenders in a period of time. During the allowable period of time you will only be dinged on your scores as if you only had 1 INQ. Once the allowable period of time elapses, you will be dinged again when you reapply.
While you have an allowable period of time I just want to clarify that your scores will only get dinged as though you had only 1 INQ during this time. But even though you may get a small ding during this time, under manual review when applying for something, they will see all the INQ's and may hold them against you for approval.
01-22-2013 06:16 AM
Yes your score will be knocked down by a few points when you re-apply. As am alternative, you can check your own FICO scores from myFICO which will not affect your score. If the score is sufficiently high then you can apply for the mortgage. Note that you can rate shop with several mortgage providers over a short period of time (I think it is 28 days but check that!) and it will only count as a single inquiry. You should also look at getting your free annual credit report from annualcreditreport.com which will provide you a detailed report so you can check what may be reducing your score and take corrective action.