Posted on: 20th Jan, 2013 01:19am
If you are a rational home buyer, you are likely to shop around before making the actual purchase. By shopping around, you can find out the best mortgage quote. You need to however know how to shop around smartly without damaging your credit score.
You gather information from a variety of lenders before making the final call. Lenders also go through your credit reports before providing you the quote. They pull your report which is called as hard inquiries. The rational lending agencies check your credit score to offer you quotes which suit your requirements.
Anyways, hard inquiries hurt your credit score negatively. When a mortgage lender makes a hard inquiry, your credit score gets dropped by only 5 to 7 points.
Now, the question that arises is, “Is it possible to shop around without damaging credit?†Yes, there is a way to avoid/reduce the negative impact of several hard inquiries as you shop around for a loan. In order to avoid the negative impact on your credit score, you should avoid shopping around for a loan with much time gap. If the repeated inquiries are made almost at the same time, it is counted as a single inquiry. In such situation, only the first inquiry affects your score negatively. Depending upon the formula used by the credit bureau, the time span of repeated inquiries should be around 14 to 45 days so as to make them counted as a single inquiry.
You gather information from a variety of lenders before making the final call. Lenders also go through your credit reports before providing you the quote. They pull your report which is called as hard inquiries. The rational lending agencies check your credit score to offer you quotes which suit your requirements.
Anyways, hard inquiries hurt your credit score negatively. When a mortgage lender makes a hard inquiry, your credit score gets dropped by only 5 to 7 points.
Now, the question that arises is, “Is it possible to shop around without damaging credit?†Yes, there is a way to avoid/reduce the negative impact of several hard inquiries as you shop around for a loan. In order to avoid the negative impact on your credit score, you should avoid shopping around for a loan with much time gap. If the repeated inquiries are made almost at the same time, it is counted as a single inquiry. In such situation, only the first inquiry affects your score negatively. Depending upon the formula used by the credit bureau, the time span of repeated inquiries should be around 14 to 45 days so as to make them counted as a single inquiry.
Hi there, I'm planning to take out a mortgage in a few month's time. Can I shop around for mortgages without damaging my credit? What is the best way to do so?
Hi Karlos,
Yes, you can shop around for a mortgage without damaging your credit.
You should make sure that you don't apply for a home loan unless you're ready to work with a dedicated Mortgage Professional who can offer all the loan programs and products which you will be interested in. You should even check out your mortgage affordability by using the free online mortgage calculators before you start applying for a mortgage.
Thanks,
Jerry
Yes, you can shop around for a mortgage without damaging your credit.
You should make sure that you don't apply for a home loan unless you're ready to work with a dedicated Mortgage Professional who can offer all the loan programs and products which you will be interested in. You should even check out your mortgage affordability by using the free online mortgage calculators before you start applying for a mortgage.
Thanks,
Jerry
Hi Karlos!
Welcome to forums!
It is true that when you shop around for mortgages, the lender will pull your credit report in order to find out whether or not you can qualify for a loan. Multiple inquiries can count as a single inquiry if they're all performed around the same time. This span of time can be 14 or 45 days depending on the formula the agency uses.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
It is true that when you shop around for mortgages, the lender will pull your credit report in order to find out whether or not you can qualify for a loan. Multiple inquiries can count as a single inquiry if they're all performed around the same time. This span of time can be 14 or 45 days depending on the formula the agency uses.
Feel free to ask if you've further queries.
Sussane
Yes, you can shop around for a mortgage without damaging your credit.You should not apply for a home loan unless you find a good mortgage lender who will explain you in details about home loan process. Make it a point to check your affordability before taking out a home loan so that you can manage with the payments.
If you shop around and take a prolonged time to find out the best quote, it will have some negative impact on your credit score. This is because, if you try to get mortgage information from a particular lender, then that lender also pulls your credit report. This kind of pulling of the credit report is called the hard inquiry. For each inquiry, your credit score gets lowered by 5 to 7 points. However, if the inquiries are made within a time span of 14 to 45 days (as decided by the credit bureau), all the inquiries are counted as a single inquiry. So, it is advised that you should not take inordinate time in shopping for a home loan.