Get Multiple Loan Estimates When You Shop For A Mortgage Without Hurting Your Credit
Looking for a mortgage, auto or student loan may cause multiple lenders to request your credit report, even though you are only looking for one loan. To compensate for this, FICO Scores ignore mortgage, auto, and student loan inquiries. This means you can shop around for a mortgage and it will not hurt your credit. Within a 45-day window, multiple credit checks from mortgage lenders are recorded on your credit report as a single inquiry. This is because other creditors realize that you are only going to buy one home. You can shop around and get multiple pre-approvals and official loan estimates. The impact on your credit is the same no matter how many lenders you consult, as long as the last credit check is within 45 days of the first credit check. (Note: the 45-day rule applies only to credit checks from mortgage lenders or brokers – credit card and other inquiries are processed separately.)
Even if additional lenders need to check your credit after the 45-day window is over, shopping around is usually still worth it. The impact of an additional inquiry is small and shopping around for the best deal can save you a lot of money in the long run.
Inquiries tell other creditors that you are thinking of taking on new debt. An inquiry typically has a small, but negative, impact on your credit score. Inquiries are a necessary part of applying for a mortgage, so you can’t avoid them altogether. But it pays to be smart about them. As a general rule, apply for credit only when you need it. Applying for a credit card, car loan or other types of loans also result in an inquiry that can lower your score, so try to avoid applying for these other types of credit right before getting a mortgage or during the mortgage process.
Before you start shopping for mortgage rates be sure you are ready first. You should pull your credit reports from all three bureaus: Equifax, Experian, and TransUnion. Once a year Federal law allows consumers to obtain all (3) credit reports for free. To receive your free credit reports, go to www.annualcreditreport.com. Your free credit reports will not include your credit scores. You can obtain your credit scores from any of the 3 credit bureaus by paying a fee. All credit bureaus have services that will provide you with all 3 of your scores. There is no need to order your scores from each individual credit bureau. When you get your credit scores, remember that more than likely your score will vary from one credit bureau to the next.
If you need to improve your credit first and you need assistance with problems that you feel you cannot fix yourself, find out more about the Mortgage Ready program by clicking here.