This is going to be brief. Why? Because the concept is very simple: For most, making a credit inquiry when getting a mortgage pre-approval will not hurt their FICO score. If you:
A) Pay your bills on time,
B) Maintain a fairly low balance to limit on your credit cards, and,
C) Have developed a credit history over several years, then most likely,
D) Having a lender pull your credit score in order to assist you with getting the best mortgage terms is not going to be detrimental. In fact, it may be one of the smartest financial choices you make.
There is good reason for why the FICO model allows for shopping when a big ticket item, like a home, is on the line. Their ultra-complex algorithm knows that people who comparison shop and do their research tend to fair better financially. So the credit model not only doesn’t penalize multiple inquiries when shopping for a mortgage, indeed it creates a window of time, usually 45 days, wherein a home loan applicant can make multiple mortgage credit inquiries, AKA “hard pulls,” and have them all count as just a single inquiry. And remember, that single inquiry might have very little impact, if any at all, on your existing FICO scores.
No, I’m not giving you license to kill here. In the same week, you shouldn’t go apply for a mortgage, a loan for a new car, finally take Discover up on the 6000th piece of junk mail they’ve sent you and then hit the mall and open a few department store cards too — that’s not the definition of “multiple inquiries” in our case above. But yes, if any mortgage lender tells you not to shop because they already pulled your credit score and further inquiries will hurt, not only is that a myth, but one born of ignorance, theirs or an assumption of yours.
Don’t let the fear of an inquiry today stop you from saving thousands of dollars over the term of your mortgage of the future. If you need sound advice on this, get in touch any time and I’ll direct you to the free, online resources that support everything I’ve outlined above.
Inquiring minds want to know,
Vice President of Mortgage Lending
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Cell/Text: 415-367-5959 Fax: 415-366-1590
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