Limit number of inquiries one can do

Anonymous · ‎04-08-2022

I have just refinanced my mortgage. My credit score went from over 720 to 663. Mostly because the broker did over 10 credit inquiries in the process. Nobody tells you that this will happen, how would I know the broker would do so many inquiries? Shouldn't all those count as one? Is there any other way to refinance a mortgage? How can this scoring system be so imperfect that it doesn't realize things like that? And no way to complain or repair what definitely does not reflect someone's real credit history? That's disturbing and unfair.

Remedios · ‎04-08-2022

Hello and welcome

Inquiries for mortgage when done is certain period of time and proplerly coded will be bundled and scored as one. They are still visible as individual HPs, but scored as one.

I don't know why your lender didn't tell you how many pulls they will perform, that's up to them, not scoring algorithm.

Also, if pulls were done by various lenders because you were shopping for a good rate, you should have known they would result in separate pills.

In any case, you got a better rate, you will recover points lost for HPs in a year, they will be gone in two years. Small price to pay to save tens of thousands of dollars

dragontears · ‎04-08-2022

@Anonymous wrote:
I have just refinanced my mortgage. My credit score went from over 720 to 663. Mostly because the broker did over 10 credit inquiries in the process. Nobody tells you that this will happen, how would I know the broker would do so many inquiries? Shouldn't all those count as one? Is there any other way to refinance a mortgage? How can this scoring system be so imperfect that it doesn't realize things like that? And no way to complain or repair what definitely does not reflect someone's real credit history? That's disturbing and unfair.

10 inquiries did NOT drop your scores 60 points. Either you are looking at non-FICO scores or something else happened to your profile.

Anonymous · ‎04-08-2022

The thing is, I wasn't the one shopping for a rate. The broker did it and never gave a hint of how many inquiries would be done. In any case, I doubt these kinds of rules help in any way to get a fair credit rate. It only helps lenders push for higher interest rates. I think it's past the time for our legislators to take notice of what is being done in the credit scoring system. It's definitely a roadblock in the way of our economic development. Fixing it would do more good than eliminating taxes for individuals or creating incentives to promote growth. Well, thanks for your help.

Anonymous · ‎04-08-2022

True, sorry for that, it was Creditwise, I have just realized that. But it went from 745 to 699 in Fico, probably not just because of the inquiries, but it has something to do with the refinancing, because it was right after it. Would it be paying off the old mortgage by the new lender the reason?

bigseegar · ‎04-08-2022

@Anonymous wrote:
True, sorry for that, it was Creditwise, I have just realized that. But it went from 745 to 699 in Fico, probably not just because of the inquiries, but it has something to do with the refinancing, because it was right after it. Would it be paying off the old mortgage by the new lender the reason?

Yep, for two reasons. 1) New credit line reporting 2) that new credit line reporting at 100% UTL in the beginning. Scores will rebound in time from both of those. As said very well worth it if you saved thousands.

Anonymous · ‎04-08-2022

Thanks for clarifying that. But isn't the system broken if it does this sort of thing? Shouldn't it be smarter and see what's going on, instead of penalizing who's doing something to save thousands? How's that an indication of bad credit, or that that person should have a drop in the score?

Remedios · ‎04-08-2022

@Anonymous wrote:
Thanks for clarifying that. But isn't the system broken if it does this sort of thing? Shouldn't it be smarter and see what's going on, instead of penalizing who's doing something to save thousands? How's that an indication of bad credit, or that that person should have a drop in the score?

Smarter how?

By that logic there shouldn't be any hard pulls

Not for cards because we' re trying to earn rewards and shopping for best rate.

Not for auto loans because you're just shopping for best rate

Not for personal loans because one didn't like the rate

Not for SL because people need to go to school.

System will count them as one scoring wise, as long as they are coded properly and done within allowed period of time. That's the fix, it is smart enough to recognize rate shopping .

There are a few things scoring algorithm didn't get quite right (according to me), but this isn't one of them.

You saved money, you have inquiries that will disappear. It's not like one applies for mortgage or refinance every three months.

If you are rely that worried about HPs, you'd want to talk to lender and see why so many were done, though there is nothing unusual about that number inquiries related to mortgage refi, especially when one is close to better/worse rate tier

If you are worried about lost points, you will get some back when new mortgage reports. In the meanwhile, enjoy saving money you'd be paying in interest had you not done refinancing.

Also, 720 is on the low side for clean profiles do either you have negative items or high utilization. Working on either could possibly get you additional points.

Anonymous · ‎04-08-2022

What I'm saying is that shopping for better rates when there is no other option while refinancing shouldn't be a reason to downgrade a score, if it is supposed to be a measure of how trustworthy one is. Same with refinancing, there must be a way to show that one mortgage was paid off, another takes its place, with a lower rate -- how does that make someone less capable of paying it? If that can't be detected automatically, maybe an extra step needs to be created. Also the same with paying off car financing, the temporary drop in one's score does nothing in terms of reflecting a real change in one's trustworthiness, quite the opposite. As for my score, I still have too much revolving credit from credit cards that I've been frantically paying since I got out of the irregular hourly contractor jobs a year before starting the refinancing process, and student loans for my wife and kids -- all going according to the plan, though, these debts should only go down now. Thanks for your help.

SouthJamaica · ‎04-08-2022

@Anonymous wrote:
I have just refinanced my mortgage. My credit score went from over 720 to 663. Mostly because the broker did over 10 credit inquiries in the process. Nobody tells you that this will happen, how would I know the broker would do so many inquiries? Shouldn't all those count as one? Is there any other way to refinance a mortgage? How can this scoring system be so imperfect that it doesn't realize things like that? And no way to complain or repair what definitely does not reflect someone's real credit history? That's disturbing and unfair.

In fact multiple inquiries in connection with a mortgage are aggregated into a single inquiry by the algorithms, if they occurred within a 2 week period.