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The Myth of Multiple Mortgage Credit InquiriesPosted by
Fact: Your credit score plays a significant role in your life. Scores can determine insurance rates, employment, opening a bank account, and borrowing money like mortgage lending.
If you would like a refresher course on how your credit scores work, check out our blog post on credit scores.
Applying for too much new credit in a short period of time can adversely affect your hard-earned score. So it is natural to be nervous about shopping for a mortgage. But the major credit bureaus see the value of comparison shopping – and that’s why they cut homebuyers some slack.
Types of Credit Inquiries
Credit inquiries are broken down into two main groups: hard inquiries and soft inquiries. “Hard inquiries” may affect a credit score, while “soft inquiries” do not affect a score. It is important to understand the difference when applying for new credit.
Soft inquiries (also known as “soft pulls”) typically occur when a person or company pull your credit as part of a background check. Since soft inquiries are not an application for new credit, they won’t affect your credit scores.
Hard inquiries (also known as “hard pulls”) occur when a financial institution, such as a lender or credit card issuer, checks your credit when making a lending decision. Your mortgage consultant will need to take a look at your credit report to complete your pre-approval you to purchase a home. Granting a lender permission to pull your scores – constitutes a hard inquiry and can lower your credit.
The good news is the “hit” to your credit is typically just 3-5 points.
Shop Multiple Lenders, Get One “Ding” On Your Credit Report
The important concept is that — unlike applying for multiple credit cards — when someone applies for several mortgages, they won’t get “dinged” for multiple, consumer-initiated inquiries. This is because when they apply for five credit cards, they’ll likely get the option to use them all five. By contrast, with the mortgage applications, they’ll only get approved once.
As such, the credit bureaus have made it a formal policy to permit “rate shopping.” In fact, it’s encouraged.
Borrowers have the right to shop with as many lenders as they like. The secret though is for a client to do their shopping for a mortgage within a limited 14-45-day time frame. If you time the inquiries correctly, the credit bureaus will acknowledge the first credit pull as a “ding” — remember, only 3-5 points — but will ignore each subsequent check.
No matter how many credit checks you do, the mortgage inquiries will always get lumped into a single credit score “hit.”
So, happy shopping! We would love a chance to work with you. To get started, give us a call or apply online today!
First Class Mortgage. Our Expertise, Your Peace of Mind.Posted by
Welcome! We launched our new website and blog!
For fourteen years, First Class Mortgage’s goal has remained simple — deliver an exceptional mortgage experience. We thank our customers for joining us on this awesome journey and we hope that you will continue to be a part of our story.”
This blog is an exciting new element to our multimedia offerings. Its purpose is to answer your top mortgage questions and provide resources for your personal wealth. We will share company news, community information and breaking mortgage news.
But, we don’t want a static blog. We will leverage social technologies to engage in two-way communication with our customers. From there we will take your feedback into consideration as we create new content, tools, and resources.
Please contact us to let us know what you think of our new website and blog! All comments and feedback are welcome. We would love your suggestions for new information or topics. What do you want to learn more about? Is there something we are missing that you would like to see? What other questions do you have?
We look forward to growing with you as we embark on this new journey.
Thanks for stopping by!