Re-pull of Credit Report – Loan Approval Process


In part 1 of the series, we discussed the Loan Quality Initiative started by Fannie Mae. That post included the reason behind the initiative and some easy steps to take to avoid any complications during the loan process.

This week we’ll focus on the loan approval process itself.

Prior to Fannie Mae’s Loan Quality Initiative, the loan process has one less step in it. If someone was looking to buy or refinance a home, they would first apply for a mortgage. Then they would have a credit check. If everything was in order, then the loan would be submitted to underwriting for approval. Once the loan was approved by the underwriter, then we’d close the loan.

Now there is one extra step between underwriting and closing that can definitely impact the approval process. Lenders are required to re-pull the credit report right before closing. This makes the loan approval process look more like applying for the loan, credit check, underwriting approval, re-credit check (which is confirming the underwriting approval) and then closing.

Did you notice that extra step? This means a loan isn’t officially approved until the credit score re-pull step is completed. Why?

If a borrower has opened a new credit account, financed a car, or closed a credit account, it can impact a credit report in a variety of ways:

  • a newly opened credit account can negatively impact a credit score. If the credit score goes down too much, it could also negatively impact the interest rate
  • a newly financed car can also reduce one’s credit score. A newly financed car can also drastically impact the debt to income ratio. If this ratio is pushed up too high, it could cause someone to no longer qualify for the mortgage
  • both of these examples would put the loan back into underwriting for a second review. This could delay closing.

It is easy to avoid this pitfall. Simply follow the steps outlined in Part 1 of this series. If you do not change your credit report by opening or closing credit accounts, you’ll be fine when it comes to the review of the re-pulled credit report.

If you are looking to buy or refinance a home in the state of Georgia and would like to work with a loan officer who is aware of the coming credit re-pull and can help you avoid this potential pitfall, I know just the person to connect you with :-). Contact me today to get started.

Next week, the third and final part of the series. We’ll discuss the things an underwriter will look for on the re-pull of the credit report.


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One Response to “Re-pull of Credit Report – Loan Approval Process”

  1. Freeman Leyra Says:

    You’re truly amazing, what a strong and inspiring person! I realise this is post was a year ago, but I really hope that things are better for you now. If not I’d happily send you a food parcel or order a shop for you and have it delivered.

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