Can one more credit review or “hard inquiry” have a major impact on credit scores and cause problems when trying to get loan approval? The answer is YES it could.
For Example:
John was about to purchase a condo in NYC. The mortgage he needed approval for was 1.2 million. In the last 5 months he had shopped for a car over a period of 4 months, asked for limit increases on 2 credit cards, and he had his credit pulled for a preapproval letter when first going out with his realtor. In total he had 5 inquiries in the past 7 months. His current Fico score is a 742. He is planning on applying for the mortgage next week. John and his wife are shopping at Bloomingdales and his wife requests they purchase a sofa and put it on his Bloomingdales credit card. John agrees and when he gives his card to the cashier the card is denied due to the purchase being more than the cards limit. The cashier informs John she can request they make an exception and give him a limit increase. John agrees and the transaction is approved. He and his wife are thrilled. Unbeknownst to John, when he applies for the mortgage a week later his score is now a 710. John had no idea that six “hard inquiries” are considered extreme and could drop his scores 20-40 points. John can no longer qualify for the same mortgage. That one extra inquiry changed his plans completely. Potential loan applicants should be informed that “hard inquiries” or “third party credit reviews” could have a negative effect on credit scores and should be kept at a minimum one year prior to applying for a loan. Third party inquiries for mortgages are viewed in 45 day periods as one inquiry. These groups of inquiries (as long as they are less than 6) only drop scores 2-5 points each 45 day window.
John was about to purchase a condo in NYC. The mortgage he needed approval for was 1.2 million. In the last 5 months he had shopped for a car over a period of 4 months, asked for limit increases on 2 credit cards, and he had his credit pulled for a preapproval letter when first going out with his realtor. In total he had 5 inquiries in the past 7 months. His current Fico score is a 742. He is planning on applying for the mortgage next week. John and his wife are shopping at Bloomingdales and his wife requests they purchase a sofa and put it on his Bloomingdales credit card. John agrees and when he gives his card to the cashier the card is denied due to the purchase being more than the cards limit. The cashier informs John she can request they make an exception and give him a limit increase. John agrees and the transaction is approved. He and his wife are thrilled. Unbeknownst to John, when he applies for the mortgage a week later his score is now a 710. John had no idea that six “hard inquiries” are considered extreme and could drop his scores 20-40 points. John can no longer qualify for the same mortgage. That one extra inquiry changed his plans completely. Potential loan applicants should be informed that “hard inquiries” or “third party credit reviews” could have a negative effect on credit scores and should be kept at a minimum one year prior to applying for a loan. Third party inquiries for mortgages are viewed in 45 day periods as one inquiry. These groups of inquiries (as long as they are less than 6) only drop scores 2-5 points each 45 day window.
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