Mortgage Lenders & Impact on Credit Score

4 Replies

I am getting started with investing in BRRRR. I haven't found a property that I like to invest yet, but I want to identify the lenders, get pre-approved and get all the paperwork done and out of the way. That way, I will have a couple (3-4) of lenders that I can shop around for the best rates, after the rehab is done.

I know the lenders will want to pull my credit score/report. I understand this will lower my credit score and as multiple lenders each get my credit score/report, I am concerned that it will heavily impact my credit score negatively.

Are there strategies that you recommend to workaround this or is there a way to do this effectively without heavily impacting your credit score?

@Kosh Nathan

When I was searching for my rental property, I was also concerned about multiple lenders checking my credit. However, it is from my understanding, or rather what the lenders have told me is that multiple lenders checking your credit will not impact your score significantly. As long as they were all done in a short period of time like 30-60 days of each other, FICO will see it as you are shopping for mortgage.

Unfortunately there is no way to skirt around them not pulling your report, each company wants their own record. So if I were you, I would ask about there mortgage terms and guidelines, if you like what they offer then let them pull your record. If you don't like them, do not let them pull it.

@Kosh Nathan The best practice will be prepare the file with best lender with whom you would like to work.  You may know your credit score, talk with all the lenders pick one and let him/her prepare the file.  Do not pull your credit multiple time even though that won't effect if pull in same window time.

Originally posted by @Kosh Nathan :

I am getting started with investing in BRRRR. I haven't found a property that I like to invest yet, but I want to identify the lenders, get pre-approved and get all the paperwork done and out of the way. That way, I will have a couple (3-4) of lenders that I can shop around for the best rates, after the rehab is done.

I know the lenders will want to pull my credit score/report. I understand this will lower my credit score and as multiple lenders each get my credit score/report, I am concerned that it will heavily impact my credit score negatively.

Are there strategies that you recommend to workaround this or is there a way to do this effectively without heavily impacting your credit score?

 Congratulations on the start of your journey.  If you know your credit score you quote it to the potential lenders and they can provide conditional quotes and/or do a soft inquiry.  When you are in actual contract then have your score pulled for a hard quote.  

If you already have a mortgage on your primary residence, start with that lender. I love my credit union. Similar market rates and good closing costs. You can probably get enough information to narrow down to one lender for a pre-approval letter. As a previous poster mentioned, so long as multiple inquiries are close in time, it won’t hurt your credit.