A couple of random questions.
When a new banker pulls your credit, does it actually show the amount in the Checking and Savings accounts? I have a few (old accounts a couple hundred bucks) accounts with zero activity, are they listed as well? I can't remember...
We did eight deals last year. When one potential new banker viewed our credit, they said "why did they pull your credit 10 times"? This is for the entire year, but the new bank said we would've only pull it once or twice. Now we already had a line of credit (and a 25 yr. history) so why (basically once a month) would he pull it knowing it will lower our scores? No, this isn't a question I should ask them. This is small compared to a ton of unnecessary events all year long. However, I wonder how much damage did it do?
Now, according to FICO, inquiries from a lender you have an open account and relationship with DOES NOT lower your score.
Lines of credit are being pulled all over the country. The bank might have been looking for a reason to find risk to pull yours. 10 credit checks has the potential to lower your score 30 to 50 points. That is enough to cost you a loan, or raise the interest rate and make a deal not make sense.
Your savings account balance does not show up on your credit check.
A credit check is only good for 60 days I believe. If your new deal was more than a couple months apart, the bank is required to pull another.
In these days a "25 year history" does not mean anything, ask Wachovia.
Thank you for your replies. Yes, it DID hit our score and more than I ever imagined. Our banker pulled it 10 times in 2008. We had ten loans on a line of credit. We've used the same guy for years. We have no other loans anywhere else. Not even a small or car loan. I've now had it pulled three times shopping for a new bank and a new line of credit. The first two said something about it, I brought it to the thirds attention before he had a chance. The processor at the first bank said "why on earth did your bank pull it this many times"? Now with three more hits it's killed it. How long until 10 RE payments made on time, should I see an incline?
Is it the LENDER who holds those notes pulling the credit or the mortgage broker?
Local lender... 70 total... Within 12 months time. Also, the rapid debt but it was mainly the 10 times pulled, per the other local banks. They said once or twice a year if we were their client with a line of credit. We've never missed a payment nor ever over 30 days late. It just makes me sick, very very sick.
I doubt 10 Inquiries in a year will drop your score that much.
Not that that makes it any better, can't imagine how po'd I would be too.
Does your loc report as revolving or installment debt? If it reports as revolving and you don't have some other decent under utilized tradelines showing that in itself will hurt your score alot.
Have you tried talking with the bank that kept pulling, its a longshot but its possible they would remove some of them.
Talk to the bank and ask why. Let them know they destroyed your credit. Kind of harsh words, but you are not any where near the credit risk at 650 than 720 in the banks eyes. (I do not know your real scores) If they can not give you a good reason, write to the three credit agencies. Complain about what happened, the bank must reply in a certain amount of time with an exceptable reason. If not it is taken off you record. My wife did this for me about old credit cards, a written off tax lean and a couple other things. Within a month and a half my score went up from 690 to 755. Worth a try.
John, I most certainly will write to them. I can't do a thing about speaking to them. An array of recent events sent me over the edge. Sloppy, unprofessional events. I just need to use my better judgement and decide how to word it. A great source just the other day informed us, the bank is 99% loaned out and can't make anymore loans until they free up some money. Not really understanding that side of things, I'm not sure of why. They said all the local branch's can't make a single little consumer note on anything unless they call the regional Pres. This also came from "the source". We've always relied on our scores to keep loans going over the past 10-15 years. I've hated being under one banks mercy and this now has serious consequences. Being loyal to them, has cost us our credit. If we had another line somewhere else, they would have possibly caught it. I've not viewed our credit since we started rental rehabs a year ago. The last person we should worry about hurting our credit, is our banker, right? Now with the lower credit and (you are right on with your guess) and a high dti I'm feeling pressure. Now we've always been self-employed with the exception of one full doc small salary (10 days a month). One bank said they would talk with us if we moved everything to them. Again, at the banks mercy. Another said they would basically expect it too. This last bank is very tempting. If they can give me some type of guarantee (although nothing is a guarantee) that they won't stop us in our tracks, I would be 100% game. I'm crushed our bank has put us in this position. But... not near as crushed about killing our credit instead of protecting us. They should had known how to structure this on our credit under a skill, right? If S. Williams can better explain, it might help me with my letter. Should they had known better than to just do a revolving without setting up as a trade?
S. Williams, you are correct on the revolving. It's all under us personally and I have not a clue you could list it under a trade line. I'll have to figure out the details of this and hopefully correct it with the new lender.
I've dreamed about a 775ish score, thinking this would help prove our stability and give anyone confidence in us, and now look. We do this for a living. It's our main bread and butter. We built a few customs per year, for 12ish years and with the "new" market we quickly switched gears. We've had a great year. Very physical and non-stop, but knowing we are hitting it hard for 3ish years will give us comfort. 100 times less stress than picky, greedy, can't make up their mind, wanting 10 changes a week, but not wanting to pay for it customers. Not to mention, these are still mine and not needing to be perfected for tenants. We absolutely love it. It's what we know, it's in our blood, it's not a challenge, we just love it. I haven't seen DH so happy and relieved of stress in years. We're on the same page at the same time. The stress is all in the financing. It's a constant worry about financing 35-50 small rentals. I have so many question about reaching our goal quicker by increasing volume, but now I'm stuck worrying about getting all the money we need to get there. The thought of paying a high percentage for private funds makes me ill. This means more time, work and less cash flow. We are trying to stay as close to the 50% rule as possible, as quickly as possible. Lots of random early morning thoughts here, hope you don't mind. If I've repeated than I'm sorry, I'm running back and forth to the laundry room and office. It's hard to pull yourself away from biggerpockets. :)
Two things...
First, if the lender who pulled your credit 10 times is the lender who actually HOLDS the LOC note, then according to Fair Iassacs those pulls ARE NOT considered in the FICO model.
Second, if they are pulling your credit that often there is some problem. You said it was a small lender, go sit down with the President of the bank and SHOW them the 10 pulls on your credit. He can do two things. He can find out WHY for you AND he can get the bureaus to suppress the excessive ones.
There are some pieces missing in this story but I seriously doubt those ten pulls are keeping you from getting the other loans. I'd bet the high DTI is what is gumming up these works.
Taz, The ten pulls caused the 70 pt drop in fico. You know banks are black and white. A 699 score will not ever qualify for a product with a 700+ score. In our world it is only one point. In their world, you no longer qualify. In this tightened lending market we are in, bank seem to be looking for any reason not to lend. An excuse with a lower score is not going to get you to 2nd base to explain the DTI ratio.
So is the theory that "pulls by existing creditors don't affect score" bunk?
No, I think we all know any pull will ding you 10 pts or so. Relation or not.
Taz if Fair Issac states it than is it fact that they apply the rule? I also think every time it's pulled it hurts. None of the new potential bankers said anything about what Fair Issac states. Also Taz, their was no problem and no missing pieces to the story. Why would I leave anything out? It is what it is and I can't imagine why such a drop. This is the reason I'm asking. Would the immediate DTI hurt me this much? Yes, John you are right. Every single point makes a difference.
I think there are other things that caused the drop in the score.
On really big clue, in my opinion is this...
However, Debt to Income, and the amount of available credit you are using make up 35% of your score. That is why I believe the high DTI is affecting the score MUCH more than these pulls he mentions, which according to Fair Iassacs wouldn't affect the score at all if they are on open accounts.
But, hey, don't believe me. Go to the Fair Issacs site and find out for yourself.
Taz, this is what I'm trying to figure out. I'm going by the surprise of the other bankers and them stressing to me that they won't pull it like the other guy did. Their reaction was "oh my" and "why"? My bills are paid ON TIME as I've stressed in my earlier post, this is how we have obtained loans for years. I'm anal about not dinging my own credit. This is a concern to me and a shock. Why would I want to tell half a story and expect a whole answer? I'm trying to figure it out and see if I can help reverse it. It's important to me. Livelihood...
"If the pulls were from a lender he has open accounts with, then, the execs from Fair Issacs lied in their testimony before Congress."
Do you really think this does not happen?? From Baseball players and steroids to a disgraced, cigar loving, ex president that wanted to be the first, first man lied in the highest of high places after being sworn in. DTI will hurt. But pulling a credit check lowers the score, every time. Unless you have 2-3 pulls with in a couple days. It is considered loan shopping, and counts as one.
On second thought, never mind.
Russianbound, if you think you were wronged, get and attorney and sue the lender and Fair Issacs.
First of all never think that just because someone is a banker, or your banker they know all about credit or care about your best interests. Obvious at this point :(.
Many times I have heard in person people who should know better say incorrect things regarding credit. And I am no expert, just took an interest in my credit and have done alot of reading and trying to improve.
On inquiries, when you apply for new credit you get a hard inquiry and your fico gets dinged for a few points. My understanding is that the first few hurt but there is a limit on what you will lose to them. The resulting new accounts will probably hurt your score more.
Your existing creditors will pull your credit for a variety of reasons, account review every month, or year, whatever just depending on the creditor, to see how your file looks.
These are called soft pulls and don't hurt your credit, noone but you sees them.
The biggest problem with alot of inquiries has nothing to do with your score, but that it makes you look desperate to the lender and is a reason for denial on its own independant of your fico.
It sounds to me like your bank was pulling a hard, as if you were applying for a new loan, for each deal you did.
Even though credit is very serious and important, it helps me to think of fico scoring as a game of sorts.
Read up on the components of fico scoring and do your best to manipulate your credit file to what fico likes.
With what info you gave us I'm still going to say your score is a result of high utilization more than the extra inqs.
Also fico likes to see usage on several accounts, so another few cards reporting with very low or no balance would help.
Fico treats revolving and installment debt much differently, otherwise most peoples mortgages/car loans would really hurt their credit.
If the loc you are using is revolving, and you could find a lender that would report it as installment, that would help your score alot.
You may want to pay monthly for a credit monitoring service that lets you pull your credit.
Its nice to see the changes, and which bureau is reporting what. Right now it would be helpful for you to know if the inquiries are on all three or just one.
If they are on just one, you could do a little research and maybe apply for credit with a lender who pulls a different bureau, and would not even see them.
A couple of things about applying for new credit:
Try not to apply for anything randomly without looking carefully at wether or not you will be approved.
And don't limit yourself to local lenders, there are a bunch of great national banks and cu's
Whew, long reply
Hope it helps a little, Scott
A quick clarification... some posters (Anti Guru, for one) have mentioned that high Debt to Income ratio will lower your FICO. But the reporting agencies don't know your income, as far as I know. Its the utilization thats hurts you, the ratio of actual debt to credit limits.
Of course, the lender DOES look at debt to income ratio, and can deny credit because of it.
Can somebody please correct me if I'm wrong here?
I had a mortgage broker in Florida sub out my loan application and that resulted in 3 or 4 inquiries over a good length of time. Of course, then, after the damage was done he admitted he only had two vendors that they worked with. I wrote, complained, put a statement on my credit report but I learned to be cautious about having my credit pulled and always ask.
I discovered Wells Fargo was checking my credit every month and when I called they stated that was "routine", Closed that account. Didn't owe them anything and they were still pulling my credit.
If you have 4 inquiries lenders think you are close to bankruptcy. They will not loan you money--it doesn't matter that they have a full explanation.
Reading through the posts I would guess that the multiple pulls may have cost you 10-15 points but it is really unlikely they cost you 70 points. One of the previous posters is correct about it being utilization that kills you. So think about this.... if you have limited tradelines and one of your biggest is the Line of Credit you are talking about, (let's assume it's a $100k LOC) and you did 8 deals in $10k increments you went from 10% utilization of that LOC on the first deal to 80% utilization on the last. And the bigger that LOC is the higher percentage of your total available credit it becomes and the more it impacts your score. Depending on the exact circumstances and the rest of your credit you may be luck it didn't dive further.
I can tell you for a fact that every "new loan" or "increase in credit line" will hurt your credit score by about 10 points.
I have a HELOC that was granted on a house that I am rehabing. I purchased free and clear knowing that it would require new roof, ect. I have flipped other such properties to rehabbers and decided to do this one myself.
Estimated repairs at 15k and got a contractor to estimate while I secured the HELOC. The results from the Heloc came in and was granted at 30k. To my suprise the repair estimate was 36k and I had to increase the HELOC. Only a month later and this was the only other hit on my record and it did lower that score by 10 points. But the bank did say that after a month or two of payments the score would rebound by more than that 10 points because of those payments which would end up as another type of loan on my report.
Each hit on your record does affect you. I do not care about who testifies to what is supposed to be what and do what. Real life situations have proven otherwise by too many people.
I was also confused by several previous posts stating DTI effects your credit score. Your income is not on your credit report so this will have no effect at all. Now debt to credit will absolutely effect it.
Question: Do mortgages effect your dtc? Or are they considered a different type of loan?
Joe Salimao