I hope you’re doing well! When you’re in the market for a mortgage loan and looking for the best rates, you may be wondering if multiple credit inquiries will affect your credit score.
New credit ‒ including credit inquiries ‒ accounts for 10 percent of your total credit score. Any time you give written authorization to a lender to pull your credit report, it’s called a “hard inquiry.” This pertains to any application for a mortgage loan, auto loan, student loan, new credit cards, or bank loans. Each hard inquiry can cost you anywhere from 1 to 5 points.
So, if you were to apply for all these different types of loans within a short period of time, you can expect your credit score to drop, based on too many credit inquiries.
Likewise, if you apply for multiple credit cards at the same time, that legitimately adds multiple inquiries to your credit report and increases your risk factor. Revolving debt is considered a higher risk, because each credit line has its own spending limit. You could potentially max out every card and decrease your ability to honor other financial obligations.
The good news is, most credit scoring systems understand that if you’re shopping for a car or interested in buying a home, that’s a big investment and you’re going to want the best deal you can possibly get.
If you apply for multiple mortgage loans within a 14-day period of time, most credit scoring systems will lump all of those requests into one inquiry. They recognize that you are shopping for the best rates. (You could have up to 45 days, depending on which credit scoring system and software version each lender uses. 14 days is considered the “safe zone”.) This gives you some leeway to shop around without hurting your credit score.
I’m not trying to encourage you to shop around for your mortgage loan, because I want to earn your business and be your mortgage consultant for many years to come.
Based on my honesty, I hope that you will come to me for all your mortgage needs. My team and I are ready to invest our time and commitment to get you the best mortgage loan we possibly can, and help you achieve your long-term financial goals.
Please feel free to give me a call if you have any questions. I’m here to help!