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Credit Inquiries and Buying a Home

Posted by Admin JerseyLiving on Friday, November 4th, 2016 at 1:28pm.

Ask the Expert Series

Do credit inquiries affect your credit when buying a home?  Jake Dreyfuss and David Wheeler, Regional Account Executive with Credit Plus discuss how credit inquiries may affect your credit score when planning to purchase a home in Philadelphia. David is a sought-after public speaker and expert in the field of credit scoring.

Transcript:

Jake Dreyfuss: Thank you for joining us for another edition of Ask The Expert. Today we're joined by David Wheeler, regional account executive for Credit Plus.  David, thanks for joining us.

David Wheeler: Any time.

Jake Dreyfuss: Today's topic is this word, inquiries. A lot of times customers come to us, they say, "I'm afraid to get my credit pulled. What happens if I do it? What happens to my score?" Can you set us straight here?

David Wheeler: Sure. There's a lot of myth with inquires. First, let's say it's not true that every time someone pulls your credit that your score's going to drop.  It doesn't happen like that. Scores really only have an inquiry potentially drop them if you're trying to spend somebody else's money. When credit reports are pulled for employment, insurances, pre-screened offers of credit, you're not trying to spend somebody else's money, so those things you normally don't even see on a credit report that you get for a mortgage. It's when you're trying to spend somebody else's money, we look at it in two different ways.  

One is, you're going to get something like a credit card. It's a specific set of funds for a specific store, specific place, those types of inquiries may impact you, and if they do impact you, it might be between three to five points when you do that. You can really only lose 50 or 60 points from all of those inquiries, and you can't do any more damage, so there's a cap to that type. Now I'm not sure if too many people that go out and apply to 10 or 11 stores at once. That normally doesn't happen so you have to work pretty hard to lose all those inquiries.

I think what most people are concerned about is when you get a mortgage, or you're going to apply for a mortgage, will that inquiry impact you? It's different from the credit card shopping where we know that when you start, you're going to go through a process where people, multiple people will pull your credit report to make sure that they have the best deal for you. It's not that you're trying to buy a new house every time someone gets the credit report.

The only one we really look at is just the first one that started the shopping process. You can do people a favor and extend the amount of time they have to shop by [02:00] pulling credit for the purposes of a mortgage, because it still looks like you're buying just one property. It's when you start the process, stop, and let some time pass and restart sometime later, now it looks like you're buying two properties, and that one can potentially hurt you a little bit more. That range is a little bit higher, sometimes five to ten points.

David Wheeler: That's great information. I'm sure that's a pretty common misconception out there that you see.

David Wheeler: Very common.  

Jake Dreyfuss: Great information, thank you.

David Wheeler: Thanks.

Jake Dreyfuss: For more information on this topic and to check out some of our upcoming webinars, please feel free to click on the link below, or of course visit JerseyLiving.com. Thank you.

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