Isn't it considered a bad thing to have multiple entities pulling your credit when you are getting ready to make a major purchase? I wonder why Countrywide requires that...plus, it sort of hinders your negotiating power a little, doesn't it, if they know how high you can go?
FICO is one of 3 scores used by lenders. I think the general approach is the same. Here's how FICO explains it...
Looking for a mortgage or an auto loan may cause multiple lenders to request your credit report, even though you're only looking for one loan. To compensate for this, the score ignores all mortgage and auto inquiries made in the 30 days prior to scoring. So if you find a loan within 30 days, the inquiries won't affect your score while you're rate shopping. In addition, the score looks on your credit report for auto or mortgage inquiries older than 30 days. If it finds some, it counts all those inquiries that fall in a typical shopping period as just one inquiry when determining your score. For FICO scores calculated from older versions of the scoring formula, this shopping period is any 14 day span. For FICO scores calculated from the newest versions of the scoring formula, this shopping period is any 45 day span. Each lender chooses which version of the FICO scoring formula it wants the credit reporting agency to use to calculate your FICO score.As for the lender requiring pre-qualification and then knowing your "limit" so as to be in a better position to negotiate, something I would consider is the following: if they had two borrowers, one with unlimited borrowing capacity and a second who was stretched thin, I'm not convinced they would be more willing to negotiate or come off the price with the borrower who was stretched thin.
I think they are just trying to make sure they are dealing with a buyer who can close. And if they can keep the loan with a highly qualified borrower it might not be a bad business decision.
Hope this is helpful.