What's the Difference between a Hard Pull and a Soft Pull for a Credit for a DSCR Loa

[Robin Simon]

🤔What's the Difference between a Hard Pull and a Soft Pull for a Credit for a DSCR Loan?
➡️In the world of DSCR Lender credit checks, there is a differentiation between what is called a “soft pull” and a “hard pull.” For better or for worse, a “hard” credit check, for when a full credit report is ordered and run and provides great detail, can be a negative factor that reduces your credit score! For this reason, many people, especially real estate investors that are frequently adding to their portfolios, are weary of granting a lender the opportunity to do full credit reports very early on in the process such as in the quote stage, since the deal may be just an idea and low probability, and harming your credit through an official hard pull isn’t worth it. On the other hand, getting accurate quotes for what you qualify for, in which FICO score plays a large role in both qualification and rate and terms, is also critical so that investors can accurately “run the numbers” when shopping for properties.
One solution for this problem is what is called a “soft credit check” or (“soft pull”). This allows lenders to do a scaled-back version of a full credit report to get a mostly accurate credit score for a potential borrower, without the inquiry harming credit. For this reason, it’s the “best of both worlds” in that investors can get a much more accurate set of quotes (instead of one based on their own estimated credit guess) without harming their own FICO rating. When and if the deal progresses towards a more certain transaction, a full credit report can be ordered later on in the process.

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