Is there a rate-shopping "grace period" with personal loans, like with mortgages?

[Anonymous]

Hello - ok, so i am going to be borrowing 6 figures on personal unsecured loan(s), for a new business venture. I have a good FICO (approx 780), no debt, and $75k un-earned income from 2016 via SSA-1099, 1099-R, and 1099-B .... To my surprise, most lenders are allowing the un-earned income as income, for loan purposes.
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I have already prequalified at most of the known personal lenders (e.g. $25k at Marcus, $75k at SoFi, etc etc etc). These were all done using soft-pulls. Obviously the hard-pulls come when i pull the trigger on each loan. What i cannot figure out .... i am rate shopping, AND looking to borrow as much as possible. If i can get one loan that is big enough (e.g. $150k at Finance Factory), then that will suffice.
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So my question is: is there an X # of day grace period while i am rate shopping, so that all these hard pulls within 1 or 2 days dont result in huge red flags in the lenders' and/or CRA's algorithms? Obviously, i dont want the door to shut in the middle of the process. To mitigate this risk, i am going to borrow the largest loan first. I know that there is this type of grace period with things like mortgages and car loans. so that rate-shoppers dont get their credit score harmed just because they're trying to get the best rate.

Thank you!
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ps - Before you say it ((grin)) ..... no, i cannot spread out these loan applications over time, the borrowing is time-sensitive, and all needs to be done ASAP.
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ps - Other info (not sure if helpful): $250k open LOC on CC's, with 1% utilization.

[Revelate]

Nope.

There's been some wonkiness on TU possibly doing a grace period on all inquiries but that's not been rigorously confirmed at least from what I saw, and to my knowledge it's just mortgage / auto / student.

That said most of the personal loan places outside of CU's have SP pre-approvals, at least you can use those to get an idea of what you're looking at.

[Anonymous]

Thank you Revelate, appreciate it!  .... yes, i have already done several SP's, and can borrow from many places...

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Maybe i am over-thinking things here - is this logic correct?: let's assume each HP lowers my FICO 08 by 5 pts .... does that mean i will be able to "stack" these loans, and get several of them, since my fico will still be in good shape after each HP? ...... OR, is my fico going to get crushed immediately by the first big loan i get, because of the dollar amount (e.g. $75k from SoFi)? ..... from what i have read, installment loans dont have as bad an impact on credit utilization as credit card debt ...... for me, every $30k on a CC lowers my FAKO's roughly 100 points ... so, even if an installment loan is "half as bad" as CC debt, will my fico drop roughly 100 points on that $75k SoFi loan? 

[Revelate]

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@Anonymous wrote:

Thank you Revelate, appreciate it!  .... yes, i have already done several SP's, and can borrow from many places...

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Maybe i am over-thinking things here - is this logic correct?: let's assume each HP lowers my FICO 08 by 5 pts .... does that mean i will be able to "stack" these loans, and get several of them, since my fico will still be in good shape after each HP? ...... OR, is my fico going to get crushed immediately by the first big loan i get, because of the dollar amount (e.g. $75k from SoFi)? ..... from what i have read, installment loans dont have as bad an impact on credit utilization as credit card debt ...... for me, every $30k on a CC lowers my FAKO's roughly 100 points ... so, even if an installment loan is "half as bad" as CC debt, will my fico drop roughly 100 points on that $75k SoFi loan? 

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If you stack them in a short time period other than inquiries you can do what you're saying; it depends on the specific FICO algorithm but they're all way more forgiving towards installment debt.  

Scorewise inquiries are binned so it's not a linear drop for each inquiry, for me I was small or nothing then I dropped a bunch on a single inquiry when I got to some breakpoint on EX (where most of my inquiries land).

Installment debt's not even a half as bad thing, the forumulas don't work that way either.  FICO-wise you always want to finance things installment debt, though if the APR's are higher than your CC's that's bad math financially: taking on a boatload of installment debt was like 22 points on my dirty file and that was on the worst possible case in having installment debt down under 9% anyway... I can drop more than that just getting to 30% revolving, not to mention 100% for sake of the discussion.  That's not linear either, but in general revolving debt is not anyplace you want to be from a FICO perspective.

FAKO's are mostly useless for such analysis.

[Anonymous]

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@Revelate wrote:

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If you stack them in a short time period other than inquiries you can do what you're saying; it depends on the specific FICO algorithm but they're all way more forgiving towards installment debt.  

Scorewise inquiries are binned so it's not a linear drop for each inquiry, for me I was small or nothing then I dropped a bunch on a single inquiry when I got to some breakpoint on EX (where most of my inquiries land).

Installment debt's not even a half as bad thing, the forumulas don't work that way either.  FICO-wise you always want to finance things installment debt, though if the APR's are higher than your CC's that's bad math financially: taking on a boatload of installment debt was like 22 points on my dirty file and that was on the worst possible case in having installment debt down under 9% anyway... I can drop more than that just getting to 30% revolving, not to mention 100% for sake of the discussion.  That's not linear either, but in general revolving debt is not anyplace you want to be from a FICO perspective.

FAKO's are mostly useless for such analysis.

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Thank you!  ah, those bins again, makes my mind go numb LOL ..... Luckily, my rates on the installment debt will be lower than my CC rates, so i'm set there. 

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I'm not understanding your sentence: ".....having installment debt down under 9% anyway". Do you mean 9%, as in, that was the total amount of your installment loans, as a % of ALL your credit lines?  

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Here are my rough specs: all 3 FICO 08 scores = 780 .... $250k LOC on CC's, with 1% utilization .... $75k un-earned income for 2016 (some places dont count the 1099B of $25k though) ....... roughly, do you think i will be able to borrow $150k to $250k in installment loans? (that's my goal)

Also, when you say stack in a short period, should i literally apply for all of these at the same time? (which is do-able online) .... Thanks for your help!

[Anonymous]

Since you have no open installment loans of any kind right now, we could suggest a way to raise your FICO 8 scores by about 30 points (at each bureau) through getting a $500 Share Secure Loan and then paying it down to a balance of $44.  The score boost would kick in by July 10-15.  I am guessing that this would delay your plans too long, however, since you say you need to apply for these big unsecured loans ASAP.

Can you confirm that this is not an option?

The Share Secure Loan we'd recommend involves no hard pulls.

Although there will be an effect on your FICO scores when these big unsecured loans appear on your report, that effect will be comparatively small and most importantly it takes a while for the loans to appear on your reports, often a month or more.  (The inquiries will appear much more quickly -- within an hour sometimes.)

Regardless, I would assume that you'll want to be honest in each application about what your current accounts and debt are (if asked) even if very recently approved loans have not yet appeared as accounts on your reports.  I have never tried applying for several personal loans all at the same time, however, so I don't know exactly how that scenario works.

[Anonymous]

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@Anonymous wrote:

Since you have no open installment loans of any kind right now, we could suggest a way to raise your FICO 8 scores by about 30 points (at each bureau) through getting a $500 Share Secure Loan and then paying it down to a balance of $44.  The score boost would kick in by July 10-15.  I am guessing that this would delay your plans too long, however, since you say you need to apply for these big unsecured loans ASAP.

Can you confirm that this is not an option?

The Share Secure Loan we'd recommend involves no hard pulls.

Although there will be an effect on your FICO scores when these big unsecured loans appear on your report, that effect will be comparatively small and most importantly it takes a while for the loans to appear on your reports, often a month or more.  (The inquiries will appear much more quickly -- within an hour sometimes.)

Regardless, I would assume that you'll want to be honest in each application about what your current accounts and debt are (if asked) even if very recently approved loans have yet appeared as accounts on your reports.  I have never tried applying for several personal loans all at the same time, however, so I don't know exactly how that scenario works.

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Excellent idea, thank you! yes, i just failed a pre-approval at Avant because of a "lack of recent installment loan info", despite a TU of 773 ... your plan will work i think, because i am getting a 'rapid rescore' done anyway (to reflect that i just paid all my CCs to $0) .... i am going to do this Share Secure Loan first thing tomorrow morning .... 

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and that's a big YES, 100% honesty in all loan applications .... for pre-approvals, they havent asked about debt, except for my rent ($750/mo)..... if they ask about it when i am at a later stage in their process, yes, i will disclose .... 

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Thank you so much for this idea ..... post-rapid-rescore, my fico will go to roughly 810.... but your strategy will bring it to 840 ..... not sure if there is a "diminishing returns" principle when one gets to that range of fico .... but i lose nothing by doing it, so that's what i will do ...... did you mean literally pay down the loan to exactly $44? or do you just mean pay off about 90% of it?  

[Anonymous]

The first 2-3 posts of this thread will tell you everything you need to know about the SS loan technique.  Post 3 gives detailed step-by-step instructions which assume that you are using Alliant as a lender.

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Adding-an-installment-loan-the-Share-Secu...

Be sure to read this before you do anything tomorrow morning.

You mention that you have paid all your credit cards to $0.  Actually all cards at $0 will harm your score.  You want one card reporting a small balance.  Is that possible?  You just need to pick one card that will be generating a statement after June 15 and charge something small on it immediately.  The small balance will report the day after your statement prints and then should be updated on your reports a week later.

[Anonymous]

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@Anonymous wrote:

The first 2-3 posts of this thread will tell you everything you need to know about the SS loan technique.  Post 3 gives detailed step-by-step instructions which assume that you are using Alliant as a lender.

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Adding-an-installment-loan-the-Share-Secure-technique/m-p/4506756

Be sure to read this before you do anything tomorrow morning.

You mention that you have paid all your credit cards to $0.  Actually all cards at $0 will harm your score.  You want one card reporting a small balance.  Is that possible?  You just need to pick one card that will be generating a statement after June 15 and charge something small on it immediately.  The small balance will report the day after your statement prints and then should be updated on your reports a week later.

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Thanks!!!...... I had just mapped out all my CC's, and their reporting date to the CRA's.... i will make some charges tomorrow ..... should i bring utilization up to 1%? or is just a small charge like $50 sufficient? 

Also, i didnt realize it would take 7 days from 'statement print' date, to the completion of the CRA report update, i thought it was only 1 day ..... good info.

Appreciate all your help, thank you!

[Anonymous]

A small charge of $5 is sufficient.  No need to use $50 unless it's $50 you were going to otherwise spend anyway.