One aspect of applying for a mortgage loan involves checking your credit score. The mortgage lender accomplishes this by pulling a standardized credit report. This credit report gives the lender a general overview of FICO scores and overall creditworthiness.
Mortgage lenders have the option of completing a “hard credit pull” or a “soft credit pull” when completing an initial Pre-Approval. It is important to understand the advantages and disadvantages of each option.
A hard credit pull generates a complete credit report and displays it as a formal inquiry on the report. Depending on the loan program, this report generally lasts for approximately 120 days before a new credit report is needed again. The main advantage of a hard credit pull is to ensure that no data is missed as the report is fully comprehensive. Additionally, if you identify a property within this time window, you can avoid needing an additional report. It is important to note that your personal credit information is never released by your mortgage lender during this process.
On the other hand, a drawback of this approach is that too many credit inquiries in a short time frame can hurt your credit scores. Another drawback is that hard credit inquiry will undoubtedly subject you to a host of solicitation phone calls no matter what lender you use (more on that later).
A soft credit pull generates a partial credit report and does not create a formal inquiry on the report. This report simply serves as an overall upfront gauge to the lender and ultimately a hard inquiry will be needed later in the process. The main advantage of a soft credit pull is that there is no impact on your credit score whatsoever and no other lenders will know that you are shopping for credit. The disadvantage of this approach is that some credit data may not be transferred in the report which could cause major unforeseen problems later down the road.
As previously mentioned, hard credit pulls will almost always result in solicitation phone calls afterward. It is not uncommon to have five to ten different people call within a couple of days after your credit was pulled. These individuals will often use bait-and-switch-like tactics or provide unrealistic interest rates to try to entice you to switch over and work with them.
Unfortunately, your mortgage lender has no control over this as it is the credit bureaus themselves providing these solicitors with your information and not your lender. The only way to potentially avoid this issue is to get on the National Do Not Call Registry in advance. You can use this link to opt-out online.
At Bluefire Mortgage we help determine which strategy is the best for you based on your specific scenario and several other different factors. Feel free to contact us at (760) 930-0569 and one of our loan consultants will be happy to assist you.