How will using LendingTree affect my credit score?
LendingTree pulls your credit score when you complete a loan request. This is known in the credit industry as a “soft pull” because we do not pull your full credit report, just your score. A soft pull does not affect your credit negatively. In addition, LendingTree does not share your exact score with our lenders. Rather, LendingTree uses a score range to determine which lenders meet your criteria.
The information in the soft credit pull is good for 45 days. If you submit an additional loan request anytime within 45 days of your initial request, LendingTree will not pull your credit file again; however, the lenders you are matched with may pull your full credit report each time you submit a loan request.
Lender credit requests are considered “hard inquiries” and can affect your score. Keep in mind, though, that the credit bureaus understand that savvy consumers want to review multiple loan offers, so the bureaus consolidate all mortgage loan credit inquiries within a certain period (which can range from 14 to 45 days) and count them as one inquiry.
Why does LendingTree pull my credit?
LendingTree uses your credit score to determine which lenders can compete for your business. Because LendingTree pulls your credit, the lenders on our network are able to give you actual loan offers, rather than just rate quotes.
Do I have to allow LendingTree to pull my credit?
No, there’s another option. You can also be matched with lenders through our QuickMatch process. QuickMatch will still match you with lenders who meet your criteria. Without your credit score, however, lenders won’t be able to make loan offers until they talk to you directly and get permission to pull your credit. This is an important distinction between the services.
Do the lenders I am matched with pull my credit too?
They may. If you submit a request through LendingTree, you authorize the lender(s) you are matched with to pull your credit report and score. The lenders need this information on your report to generate a customized loan offer, and each lender has its own policy about pulling your credit report. The good news is that the scoring formulas used by credit reporting agencies account for this type of loan shopping.
Why do credit inquiries affect my credit score?
Lenders are interested in inquiries because multiple inquiries are an indication that you are requesting new credit. The credit scoring agencies have found that borrowers who request credit frequently tend to be higher risk borrowers. Thus, frequent inquiries on your credit report that result from frequent requests for new credit (credit cards, loans, etc.) can lower your credit score. (The lower your score, the more risk the lender sees in lending to you.)
However, credit reporting agencies understand that borrowers need to shop around to find the best loan, which can create multiple inquiries in a short time. To address this, the scoring formula doesn’t penalize borrowers for shopping around. The score is set up to take into account that even though you are looking for only one loan, multiple lenders may request your credit report. Here’s what Fair Isaac, the company behind your FICO score, says about rate shopping:
“The score ignores all mortgage and auto inquiries made in the 30 days prior to scoring. So if you find a loan within 30 days, the inquiries won’t affect your score while you’re rate shopping. In addition, the score looks on your credit report for auto or mortgage inquiries older than 30 days. If it finds some, it counts all those inquiries that fall in a typical shopping period as just one inquiry when determining your score. For FICO scores calculated from older versions of the scoring formula, this shopping period is any 14 day span. For FICO scores calculated from the newest versions of the scoring formula, this shopping period is any 45 day span. Each lender chooses which version of the FICO scoring formula it wants the credit reporting agency to use to calculate your FICO score.”*
*Copyright © Fair Isaac Corporation. Used with permission. Fair Isaac, myFICO, the Fair Isaac logos, and the Fair Isaac product and service names are trademarks or registered trademarks of Fair Isaac Corporation.