Last week I asked all of you will credit score shopping impact residential real estate? The real estate pros have spoken and as you can see from the chart, the overwhelming choice was that residential real estate would be impacted by the ability to shop for the highest credit score (87%) Do you agree with the survey results? What was the key rationale behind the predictions?
Summary of the rationale behind the impact of credit score shopping
Here are the top comments:
- Currently a tick up in rates due to the Iran war is causing buyers to withdraw from the housing market. So, it won’t have an immediate impact, but over time, it could increase the number of unqualified buyers and defaults.
- Subprime lending was one of the culprits of 2008, we have set people up to fail by attempting to tweak ownership by moving the goalposts. Lending 101, substance is part of solid quality whether thats popular or not. I hope they don’t fudge on cash flow adequacy as well…
- Lenders in the name of efficiency, decided long ago not to review the reasons behind the credit score. They just look at the number! Any new credit scoring system, that is easier on the number, will for sure lead to unqualified and higher risk borrowers being approved. This is a recipe for disaster, as certain as night turns into day!!!
- Top Comment: That depends entirely on the counter-balance of collateral risk. Credit scores are an indicator of how well a person can play a credit game, not on how likely they actually are to repay when poo hits the fan. Collateral risk is the counterbalance. If banks continue to discount both risk factors, bubble. If they course correct on either one, we’ll be ok.
Key insights on the impact of credit score shopping on residential real estate
Thank you everyone for your participation and insights in my survey. The insights in the comments from readers were amazing and I hope everyone gained a good perspective from your fellow readers. My key takeaway from this survey is that gaming the credit score by allowing shopping for the highest score will ultimately have unintended consequences with higher defaults and less credit worthy borrowers. Unfortunately we don’t know yet how everything will play out, but loosening credit scores while we are at the peak of the market is not a great idea as best case prices remain flat, but likely there will be a mild reset which will be exacerbated by looser underwriting.
We will have to wait for better data to see how it all shakes out. Thanks again and stay tuned for upcoming surveys 😊
Additional Reading/Resources:
- https://www.fairviewlending.com/2026-real-estate-predictions/
- https://www.fairviewlending.com/when-will-real-estate-crash-or-will-it/
- https://www.fairviewlending.com/what-does-the-iran-war-mean-for-real-estate/
- https://www.fairviewlending.com/has-the-economy-lost-its-mind/
- https://www.fairviewlending.com/will-mortgage-rates-fall-in-2026/
- https://www.fairviewlending.com/where-should-you-invest-in-real-estate-in-2026/
- https://www.fairviewlending.com/fed-drops-rates-why-did-mortgage-rates-barely-budge/
- https://www.fairviewlending.com/phantom-debt-soars-what-does-this-mean-for-real-estate-2/
- https://www.fairviewlending.com/never-buy-a-residential-condo/
- https://www.fairviewlending.com/the-war-on-landlords/
- https://www.fairviewlending.com/house-prices-hit-another-record-should-you-even-care/
- https://www.fairviewlending.com/root-cause-of-real-estate-price-declines/
- https://www.fairviewlending.com/will-real-estate-fall-to-2020-values/
- https://www.fairviewlending.com/washington-inflates-credit-scores-and-another-housing-bubble/
We are a Private/ Hard Money Lender funding in cash!
If you were forwarded this message, please subscribe to our newsletter
Glen Weinberg personally writes these weekly real estate blogs based on his real estate experience as a lender and property owner. I’m not an armchair reporter/writer. We are an actual private lender, lending our own money. We service our own loans and own commercial and residential real estate throughout the country.
My day job is and continues to be private real estate lending/ hard money lending which enables me to have a unique perspective on the market. I don’t accept any paid sponsorships or ads on my blog to ensure accurate information. I’ve been writing this for almost 20 years and have over 30k subscribers. Please like and share my blogs on linkedin, twitter, facebook, and other social media and forward to your friends 😊. I would greatly appreciate it.
Fairview is a hard money lender specializing in private money loans / non-bank real estate loans in Georgia, Colorado, and Florida. We are recognized in the industry as the leader in hard money lending/ Private Lending with no upfront fees or any other games. We fund our own loans and provide honest answers quickly. Learn more about Hard Money Lending through our free Hard Money Guide. To get started on a loan all we need is our simple one page application (no upfront fees or other games).
Written by Glen Weinberg, COO/ VP Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine, The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
Tags: Hard Money Lender, Private lender, Denver hard money, Georgia hard money, Colorado hard money, Atlanta hard money, Florida hard money, Colorado private lender, Georgia private lender, Private real estate loans, Hard money loans, Private real estate mortgage, Hard money mortgage lender, residential hard money loans, commercial hard money loans, private mortgage lender, private real estate lender, residential hard money lender, commercial hard money lender, No doc real estate lender
