When shopping for a mortgage, you may have concerns about having your credit report pulled numerous times within a short period.
This can occur while shopping for that perfect mortgage with multiple mortgage lenders or mortgage brokers over the span of a few weeks or even months.
But while mortgage inquiries can certainly add up, they won’t necessarily lower your credit score or affect your ability to obtain financing.
It’s Okay to Shop Around!
The developers of the Fico score know how mortgage shopping works, and have adjusted their super secret algorithm to count multiple credit inquiries in a certain time span as a single inquiry.
This time period can range from 15-45 days, depending on which scoring formula is being used; the latest allows a 45 day shopping period, the oldest just 15 days.
If your mortgage shopping spans a few months, it will look back at older inquiries grouped together in a typical shopping period and treat them as a single inquiry.
Even so, an additional credit inquiry will likely only lower your credit score by five points or less, so it may not even be a concern if you have solid credit.
Of course, credit inquiries can and will affect consumers differently based on their credit profile.
For those with limited and blemished credit history, an inquiry will probably have a larger, negative impact, while doing very little to affect a consumer with years of solid credit history.
If you find yourself just below a certain credit score threshold, you may be able to use an older credit report if all the information is the same other than the inquiries; or you can ask for an exception.
Keep in mind that keeping balances low and paying bills on time is far more important than worrying about credit inquiries.
And your main concern should be securing the best possible mortgage, not fretting about a few points on your credit score.
One final note: Do not apply for other forms of credit (credit cards, auto loans, etc) before or during the mortgage shopping process; these can definitely drag your credit score lower, potentially knocking you out of the running for that mortgage.
And check your credit score long before shopping for a mortgage to avoid any last-minute surprises (doing so will not lower your score as you’re not applying for new credit).