Can someone explain an 80/20?

[mbmouse]

Originally Posted by Gretchen B

It's been my understanding that hits on your credit report by lenders will ding your credit until you finally close and the loan becomes active. At that point, the credit score goes back up and those inquiries for mortgage purposes fall off then.

Has anybody else heard this? I've had a mortgage broker I work with alot tell me about multiple inquiries (for mortgages) dropping the client's credit score (at least in the short term).

From what I have seen, yes, the score will go up after a mortgage reports to credit, just not all they way up to where it was prior. The inquiries do not "fall off" they will still be there, just not effecting the score to the point where it was while shopping for the mortgage. Then again, you just added a large payment and balance to your credit so the score will go down anyway for a few months but should ease it's way back up with no late payments.

[olecapt]

From Fair Isaac brochure on FICO scores...

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The score allows for "rate shopping." If you're looking for a mortgage or an auto loan, you may want to check with several lenders to find the best rate. This can cause multiple lenders to request your credit report, even though you're only looking for one loan. To compensate for this, FICO scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur. When you need an auto or home loan, you can avoid lowering your FICO score by doing your rate shipping within a short period of time, such as 14 days.
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http://www.myfico.com/Downloads/File...FS_Booklet.pdf

Also indicates you get a small ding for any such inquiry...
.