Mortgage Shopping and Credit Scores

Many times we're asked about whether or not several mortgage lenders pulling a credit report will affect a borrowers' credit rating. When you are shopping for a mortgage loan, it is not uncommon to have more than one "lender" looking at your credit.  For that reason your FICO score will not be affected if the inquiries are made within a short period of time, usually 30 days. For instance, a mortgage inquiry by three lenders on three different days in the past 30 days will not be counted against you at all in terms of the score. However, a little known fact is that some lenders can also select an older version of the FICO scoring formula that will shorten this period to 14 days. If this method is used then it's very possible that your score will be adversely affected. And, if there are multiple inquiries made outside of the 30 day timeframe, they will count against your score.

So, if you are just shopping around for a lender then it makes sense to ask the lender to provide you with a good faith estimate of their charges and request that they "do not pull your credit". That way you can shop freely, and with confidence, until you find the right lender for your personal situation. Good lenders will not pull your credit unless requested by you and/or until you actually make a loan application.

It is also important to always keep in mind that opening any new credit, whether a credit card, same as cash payment plan, or any installment loan may adversely affect your credit score at the time you are applying for a mortgage. Many borrowers are not aware that lenders can "pull" credit all the way up to the closing and funding of your loan, so if you go "shopping" for a washer and dryer or buy a new car - your loan process can be halted "dead in its tracks" until the lender re-qualifies you with the new payment structures.

Credit scoring has become more important than ever as many lenders are tightening credit standards with all the fallout from the Subprime mess. Minimum scoring requirements for many loan programs have been bumped up by 20 points or more, so you don't need a misunderstanding of the requirements affecting your ability to get mortgage financing.

For more information on this or other credit issues, please contact us at Metro Mortgage Company. We'd be happy to assist you.

• Rate this Post!

  Select Your Rating:

  • 5 Stars (Excellent!)
  • 4 Stars
  • 3 Stars
  • 2 Stars
  • 1 Stars (Poor)

• Share this Post

  Share With A Friend:

  Your Name Your Email

  Friend's Name Friend's Email

  Optional Message

  Send

• Print
• Social Bookmarking

  Add to Bookmarks: