Consumer complaint received 2022-02-14
Company: Experian Information Solutions Inc.
State: NY
Product: Mortgage
Sub-product: FHA mortgage
Issue: Applying for a mortgage or refinancing an existing mortgage

Complaint:
Preapprovals for a mortgage require hard inquiries ( vs soft inquiries ) on credit bureaus. The preapproval expires in 120 days giving me 120 days to find a house. If I don't find a home within 120 days, and I want to keep looking, I have to get another preapproval, which means another hard inquiry on my credit. I now have two hard inquiries on my credit within a year. I stopped looking in XX/XX/2022, because I did not find a house I was happy with and I did not want another hard inquiry on my credit. Too many hard inquiries bring down credit scores. 

It is now XX/XX/2022. I want to look at a house I recently found but my Real Estate Agent only works with people who have a preapproval. She wont show me the house without a preapproval and the Agent for the house wont show me the house without my Agent being present. I don't want to go through another preapproval because I am bringing down my credit by doing so. I am not applying for a mortgage yet, just the preapproval for one, why is it a hard inquiry? 

The credit bureaus have made a change due to Covid 19 to temporarily give out free reports once a week, but this problem has not been addressed. I want to buy a house but can not even look without risking bringing down my credit. If a change was made to make the preapprovals soft inquiries, like when credit bureaus allow lenders to do for some credit card offers and car loan offers I get, I wouldn't have to risk my credit just for looking for a house. I was told by XXXX XXXX Supervisor XXXX XXXX id # XXXX ), that the same information is given to Lenders for soft inquiries as hard inquiries, but she did not know why preapprovals for a mortgage had to be a hard inquiry- she said its just the way its done. I asked where that guidance came from and she said it was the XXXX XXXX XXXX, which did not make sense to me so I repeated what she said to me to clarify and she insisted the XXXX  XXXX XXXX. The XXXX  referred me to CFPB. I spoke with XXXX today at CFPB and she agreed that it did not make sense, took a report and advised me to file this complaint. I did on Friday the XXXX and received notice today from CFPB they needed more information. I called them and XXXX there told me it had to do with my needing to file separate complaints against the three major credit bureaus verses one complaint. She withdrew my complaint from Friday and I am refiling today. 

I provide a solution to the problem without full insight, but still a solution. It is my understanding Covid 19 caused the housing shortage, people not wanting to move during a pandemic, interest rates being dropped to help motivate people to borrow and move the economy along. What could the benefit possibly be to negatively impact a potential borrower 's credit with a preapproval for a mortgage? It isn't the mortgage itself that is being applied for but a preapproval for the mortgage just so I can look. I am even using the same company for the preapproval. 

My request is for CFPB to find out who provides the guidance to the credit bureaus and request a change on behalf of all consumers to allow preapprovals for a mortgage to be soft inquiries vs hard inquiries.

Company public response: Company has responded to the consumer and the CFPB and chooses not to provide a public response
Company response to consumer: Closed with explanation