Credit Inquiries. Do they really lower credit scores?

5 Replies

I'm currently in the process of getting pre-approval for my first mortgage (thinking about an FHA 203k for a triplex owner-occupy), and I have a question about credit inquiries. If I want to shop around with 5-10 different banks/lenders and compare them to see what my best loan option is, won't this hurt my credit score significantly if they're all running credit checks? Is there a way to avoid this that I'm missing? I've read that one credit check can take up to 5 points off your credit score. I'd love to hear how true this is from people's experiences. Thanks!

Hard inquiries will reduce your score approximately 5 points or so, but if the pulls are of the same variety and are done within a short amount of time, FICO will group them together to count only as 1 pull so you aren't dinged for multiple inquiries and lose points for each inquiry.

There's no way around it. You will get a score drop. But they are usually off the report within 2 years.   You are better off getting a copy of your report and take your banking statements and paycheck stubs to the bank and ask them what you could qualify for before going down the path of them doing things formally on their own side. 

I'll save you the rate shopping trouble:

You EITHER want a good rate/fee combination, OR you want a 203k. 

203ks are massively expensive to originate, which is why most lenders don't do them at all. Of those that do, you're paying for it.

In any case, FHA 203ks are eligible for a streamline (no income docs, no appraisal) refinance into a vanilla FHA loan after you make your sixth payment. At that point, a nice low rate/fee combination will be possible.