Soft Credit Checks for Mortgage Brokers: A Breakdown
What is the difference between a hard pull and a soft pull?
The basic answer to this question is that a soft credit pull does not impact the consumer's credit score, while a hard inquiry does. As times have changed, consumers are more credit knowledgeable and they want to shop without harming their score. In the context of a mortgage broker, a hard pull means a tri-merge. A tri-merge can cost up to $30/pull. Imagine spending time negotiating a deal and working with a customer only to pay $30 on a tri-merge and find that they were never qualified in the first place. (You don't have to imagine, because I'm sure you've been there before, maybe a painful amount of times.) That’s where soft pulls really save the day for mortgage brokers and loan officers… Be educated on your customer from the beginning and know which deals to prioritize before spending time and money on them.
Why are soft pulls better than hard pulls?
This is the future of financing. Soft pulls are much less time consuming and your customers will be at ease, making the sale easier and making the sale go faster. The result of being able to generate more people with a soft pull application, you're generating more leads and you're working with those people quicker. This will result in selling more deals or closing more loans, whatever you're doing.
Why would mortgage brokers use soft pulls?
It starts from the very beginning of the process of generating a lead. You're going to save time generating that lead because they're not going to fill out a huge form on your website, they're going to fill out a short form that just requires their name and address. It's more attractive to them because it says, "No impact on your credit score,” or “No social security number required. No hard inquiry.” So, from the start, it's already going faster, and you can generate more leads that way with a much smoother application process.
The common denominator between businesses that need a soft pull is that our soft pull platform serves the same need for every business, saving them time.
No Trigger Leads
Mortgage professionals don’t only have the benefit of saving time, but there's even more benefits because it doesn't cause a hard inquiry. In the mortgage space you get these huge mortgage companies that just buy information. So, any time someone gets a hard pull for a mortgage ran on them, they get notified, now they're calling that person too. By doing a soft pull from the start, without having that borrower's commitment yet, you won't have to worry about anyone else competing with you. There was no hard inquiry.
Get more deals from Real Estate Agents
What's also great with mortgage, is that the consumer-facing application doesn't only get used by them. Even if they do online marketing, usually like 80% of the leads a mortgage professional gets are from referrals from realtors directly. So, by being able to give your consumer-facing application, that the buyers fill out themselves, to a realtor, it's a great way to get more referrals. A realtor is going to be more inclined to use that application, because you can tell the realtor whether it's a yes or no. So now you've just given the realtor the ability to pre-qualify their potential home buyers.
For example, “Hey, this guy John just filled out my application on your website. Sell the house to him. I can get him a loan right now” or, “Hey, this guy Brandon just filled out the application. Don't waste your time with him. He's not going to qualify for a mortgage for years, he's got to go to credit repair”, whatever the case may be.
So, we're scratching the realtors back as more of a professional by letting them use that application, and then they're scratching our back because by using that application it's being referred to you for a mortgage instantly.
And what I've found is that clients that I talk to that use that strategy can establish a better network of realtors that are referring to them, because it's more attractive and more loyalty from them. You might get realtors that send a deal to you as a broker, but they also send it to five other brokers. Offer them something that the others aren’t.