Hello, fellow BiggerPockets investors!
I am helping my brother find his second rental property. We are both in the beginning stages of our real estate investing careers and educating ourselves daily to be informed and as knowledgable as possible.
I had read/heard from a few sources that you should at the least speak with 5 or more mortgage brokers to find the best rate when first trying to network and find reliable brokers. One of the mortgage brokers my brother contacted said having multiple brokers view your credit history will affect it in a negative way. She didn't really give any more detail, unfortunately.
From your own personal experience and or knowledge, is what this broker said true or is she misleading my brother and I?
Thanks in advance,
I've also heard that but not sure if it is true. But shopping around trying to get a little better relate isn't always worth it. I've had banks who were the lowest rate, 6 months later were the highest. Try and find a bank or credit union that your happy with and seems to work with you instead of against you and go with your gut feeling . Good luck Jim Johnson
All inquiries within 30 days are considered one inquiry.
I have read in multiple places that some types of credit checks in a 30 day period are considered one check. However, most of the sites/YouTube videos I watched were for the US. (Can’t confirm about Canada.) https://www.myfico.com/credit-education/credit-reports/credit-checks-and-inquiries
According to Equifax Canada they do count as one.
Exceptions to the impact on your credit score
If you're shopping for a new auto or mortgage loan, the multiple inquiries are generally counted as one inquiry.
The timeframes vary for these exceptions. All new auto or mortgage loan inquiries will show on the credit file; however, only one of the inquiries within a specified window of time will impact your credit score. Depending on the credit scoring model being used, the window of time varies from 14 days up to 45 days.
IN USA: I am not sure where you figure this number (as one) because every time a company pulls on your report it will count as one hard pull. It will show up 30 days later. Yes it does lower your score. More than 5 hard inquiries is too many.
That myfico article does not make sense. One inquiry for each creditor will show on your report after 30 days.
@Duncan Pratt , I'm a former mortgage originator. I'm not aware of any reason Canada would be different from the USA in this regard because the FICO model for calculating a credit score is what it is. But I suppose it is possible there could be a difference.
If you look at your credit report, each inquiry will show up. However, only the first inquiry OF THE SAME TYPE within 30 days will diminish your score. If you shop 30 mortgage brokers in one month, the impact to your score would be the same as the impact of shopping only one. However, if you also shopped multiple banks for a car loan that month, then you would have two inquires count against your score. If 31 days after the first inquiry, you get another, then that would count as a second inquiry as well.
Inquiries for credit cards or other miscellaneous types of credit other than secured loans do not combine. Two credit card application on the same day will count as two inquiries for your score.
More importantly, recognize that your inquiries make up a tiny fraction of your credit score. Payment history, credit age, balance/limit ratio, etc are all much, much more significant.
Bring judicious with inquiries is wise, but letting worries over the impact of inquires on your score keep you from seeking the best deal is not. Just try to do all your shopping in a short amount of time and then stop until you are ready to move forward on a specific property.
Work with a lender to ensure you have all the information you will need for a complete application and that there aren't any issues with your application that are non-score related before letting them pull credit. Then you are prepared to very quickly have multiple lenders pre-qualify you.
I will also suggest that while over paying on your interest rate is not fun, you should consider more than just the rate. A lender that understands where you are coming from as an investor, can show you alternatives you hadn't considered without pushing you into something you don't need and cares to put in the extra effort with the processor and underwriter that can sometimes become necessary with a complex application is worth paying a small premium for.
Thank you Michael, for going in-depth and breaking it down for me!
As others have said, it will only count as one inquiry if done within 30 days. i also live in Ontario, and I recently shopped around when I purchased my home and every broker I spoke with confirmed that it would be one inquiry: I was very concerned so I asked them all.