Mythbuster: Shopping Around For The Best Mortgage Rate Will Hurt My Credit Score
There are two types of credit checks: a Soft Inquiry and a Hard Inquiry.
As per Equifax, “a ‘soft’ inquiry, can result when you check your own credit or when a promotional credit card offer is generated. Soft inquiries typically do not impact your credit score”.
On the other hand, Equifax defines a ‘hard’ inquiry as, “when a lender or company makes a request to review your credit report as part of the loan application process, that request is recorded on your credit report as a hard inquiry, and it usually will impact your credit score”.
Now that you understand the difference between the two types of inquiries, what does this mean when it comes to applying for a mortgage loan? Of course, we all know that an application pulled for an application does result in a hard inquiry, but often Clients are reluctant about looking for best rate because there is the belief that each application will result in a new inquiry and lower the beacon score each time. As per Equifax, multiple inquiries when shopping around for a car or mortgage loan are generally counted as ONE inquiry! Taken directly from the Equifax website is this note: “All new auto or mortgage loan inquiries will show on the credit file; however, only one of the inquiries within a specified window of time will impact your credit score.” It is important to note the difference between multiple inquiries, and multiple “hits” to your score. The timeframe for multiple inquiries does vary, and can be anywhere from 14 days to 45 days. This exception does NOT apply to credit card inquiries – several credit card applications at once will impact your score.
Rather than having to worry about shopping around for the best mortgage rate at multiple financial institutions, come see me! As a Broker, I will save you considerable time with my extensive network of lenders, and it means only one application and one hard credit inquiry, so no need to worry about this at all.
If you want more information on what factors impact your credit score, CLICK HERE.
Don’t let the chance to miss out on the best interest rate pass you by because of your concerns about credit checks. If you are even considering purchasing or refinancing a home or investment property, start your application today. If you would like to begin the process online, CLICK HERE.