When you’re going through the home financing process, you’ll probably hear the phrase “pull credit” often, and with different connotations. “Credit pulls” or “pulling credit” is when your credit report is requested from one or each of the three credit bureaus (Transunion, Equifax, and Experian) to determine your credit for a given purpose. When a Schumacher Mortgage Loan Officer pulls your credit, they will request your credit report from each of the credit bureaus, take the middle score, and use that score to determine your loan eligibility.
Who can pull my credit?
Your credit will be pulled when a company or individual is interested in doing business with you and would like to determine your risk. Someone like a mortgage lender, landlord, insurance company, bank, or employer might pull your credit for one reason or another. Depending on the type of credit pull (hard vs. soft), your permission may not be needed to pull credit, but there always needs to be a legitimate reason. This protects you for random strangers accessing your credit reports.
Hard vs. Soft Credit Pulls
As mentioned above, there are two different types of credit pulls:
- Hard credit pull: with a hard credit pull, your full credit report is requested. This is the kind of credit pull a mortgage lender or bank would conduct when you’re applying for a mortgage or a new credit card. Explicit permission is required for a hard credit pull because it can temporarily lower your credit score and multiple pulls in a short timeframe can increase the damage in some cases. Read on for more information about how hard pulls from mortgage lenders are the exception here.
- Soft credit pull: this is when a summary or condensed version of your credit report is requested. This is the kind of credit pull that an employer would conduct when checking your financial history for a background check. Permission is not required for this kind of credit pull because it does not have an impact on your credit score, however the requestor does still need a legitimate reason.
The 45-Day Window
The credit bureaus understand that part of the home loan process can require multiple hard credit pulls in a short timeframe. Of all times for your credit score to take a hit, during the home loan process is not ideal. For this reason, a 45-day window is in place for all credit pulls from mortgage lenders. This means that you can have a mortgage lender pull your credit as many times as you want within a 45-day window, and it will only count as a single hard credit pull. This is a big reason why it’s important to be as prepared as possible for your home financing journey when you start the pre-qualification process.
If you’re ready to kickoff the home financing process to build your dream home, get started here.