Why does buying a house bring down your credit score?

Buying a house may affect your credit score if you are not doing your mortgage shopping the right way.

The usual process for obtaining a loan is not always the best approach. For instance, when a borrower wants to buy a house they get pre-qualified with perhaps their own bank. The bank offers them an X rate, and the borrower starts to think, “I wonder if I can get a lower rate.”

Then, they check Google for mortgage rates. Most often, Google directs them to lead generation sites (the so-called comparison sites). These companies have their own unique methods of sucking in the borrower. For example, LendingTree will use low “Bait” rates to trick the potential borrower into thinking they can do better than they really can.

Zillow promises home price maps which they use in capturing your info. Bank rate or Nerdwallet will pull you in through unrelated articles they might have published.

Ultimately, they want the same thing. They want the personal and contact info of borrowers so they can sell them as Leads to loan officers.

This is where the borrower’s nightmare typically begins. They talk to one Loan officer at a lender and the LO asks to pull the borrower’s credit to verify the credit scores. But what the LO is actually doing by pulling credit is holding the borrowers best FICO. As the borrower move on to shop with another LO he also will do a similar credit pull.

If the borrower slips and allows their credit to be pulled multiple times, the first LO who pulled their credit will be holding the highest FICO score as the borrower’s credit starts to go down due to multiple credit pulls.

The first LO is at an advantage by holding the best possible score of the borrower and able to offer the best pricing compared to all the other offers. Even though this dirty trick is not discussed in widespread, it is still in practice and must be watched out.

Essentially there is no practical way to shop 400 thousand loan officers that offer different pricing using any of the existing comparison sites which are actually in the business of selling your personal info as a lead.

That is why created Parlend. Parlend’s patent-pending fair mortgage calculator calculates the best rate you can qualify for your loan and then shops that rate for you with thousands of loan officers and find the loan officer who is willing to offer you that rate instantly and anonymously

Check out our free mortgage shopping tools at https://www.parlend.com

This question was initially answered in Quora by our co-founder and mortgage ninja Kevin. View in Quora

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