Shopping for more credit and impact on credit score

[t3ch]

Hi everyone,

I am looking at trying to get more line of credit headroom (currently only have a 30k one) mainly for the flexibility it allows me for deals and emergency funds and I remember reading a forum post somewhere in which the person said she booked appointment with as many banks and credit unions as she could in a single day as applying for multiple loans in a row would be considered "shopping" and lessen the impact on the credit score, as well as banks wouldn't see you applied for other loans as it wouldn't have time to update. What are your thoughts? Has anyone tried to apply to several banks in the same day and if so what was the impact on your credit score? My credit score is pretty good (over 800) and I do like the approach of "trying them all" as opposed to take the first no as the answer, but I want to make sure I would annihilate my credit score by doing so.

 

[Alvaro Sanchez]

Please note that age of the credit is also a factor on your credit score. That is, you might get away on getting the credit by applying on the same day/week to multiple banks named LC/CC/HELOC etc. Yet, all your credit will be "new" which eventually will hit your score. This principal also applies when accepting all pre-approvals/offers from banks (No hit on your file) but the age of the credit is affected.

 

[t3ch]

That's a good point Alvaro, but wouldn't the age of the credit be affected only on the approved line of credits rather than the inquiries?

 

[Alvaro Sanchez]

That's a good point Alvaro, but wouldn't the age of the credit be affected only on the approved line of credits rather than the inquiries?

Yes but your score is affected by both on the number of inquiries + new approved credit due lowering your credit age (Average). -- That why is never a good idea to close old accounts.

 

[Thomas Beyer]

What is the value of your real estate assets minus outstanding mortgages ?

Banks give you an LOC on real estate value times 75% minus your mortgages outstanding. What $ figure is that ? Ie you can’t exceed 75% LTV usually. Plus your income has to support it. Does it?


Thomas Beyer
Asset Manager, Investor, Author, Father, Mentor www.prestprop.com

==> Check out our latest RRSP or TFSA eligible two year investment with a 40%+ yield target at www.investoliver.ca

 

[t3ch]

Hi Thomas,
I'm around 70-80% on the properties. I am looking for unsecured line of credit which is what I was about to get with my current bank a few years ago however they will not approve an increase and I don't really want to take no from a single bank as an answer. I do have a strong income right now but I am self employed so I know it will make it harder, on the flip side my properties are performing well and the numbers look good .

Sent from my SM-G950W using myREINspace mobile app

 

[Thomas Beyer]

Hi Thomas,
I'm around 70-80% on the properties. I am looking for unsecured line of credit which is what I was about to get with my current bank a few years ago however they will not approve an increase and I don't really want to take no from a single bank as an answer. I do have a strong income right now but I am self employed so I know it will make it harder, on the flip side my properties are performing well and the numbers look good .

Sent from my SM-G950W using myREINspace mobile app

Many credit card companies offer unsecured LOCs at high interest rates. To get prime or similarly low rates you need collateral, capped out at 75% of real estate asset values minus outstanding mortgages. Some banks like Scotia allow you to increase the secured LOC as the mortgages get paid down. It used to be called STEP.

Thomas Beyer
Asset Manager, Investor, Author, Father, Mentor www.prestprop.com

==> Check out our latest RRSP or TFSA eligible two year investment with a 40%+ yield target at www.investoliver.ca

 

[Frankringer]

There are various facilities available to get easy.

 

[Thomas Beyer]

There are various facilities available to get easy.

“Easy” only if sufficient equity as collateral. Is this the case here ?

Thomas Beyer
Asset Manager, Investor, Author, Father, Mentor www.prestprop.com

==> Check out our latest RRSP or TFSA eligible two year investment with a 40%+ yield target at www.investoliver.ca

 

[Frankringer]

The number of credit inquiries for your account can also impact your score.

 

[Frankringer]

It is good to clean up your credit score, pay down your balance. Hard inquiries are credit inquiries where a potential lender is reviewing your credit because you have applied for credit with them. Have a check on credit protection services.