Will Applying For Mortgage Negatively Affect Your Credit Score?

By: Thomas Cook

Will Applying For Mortgage Negatively Affect Your Credit Score?

When you apply for a mortgage, you must have your credit checked. It is the only way a mortgage company can really determine whether you can qualify for financing and what your rates and fees will look like.
 
If you are applying for multiple forms of credit at the same time, such as a credit card, a mortgage and an auto loan, such actions will negatively impact your credit score.
 
Each of these applications will generate a hard inquiry on your credit report, which could send a signal to lenders that you are having difficulty managing credit.
 
But you can avoid extra damage to your credit score if you apply for one form of credit at a time, and limit the time between each credit inquiry.
 
That’s because most credit scoring models group credit inquiries for the same type of financing (mortgage, credit cards or lines of credit) that are made within a specific timeframe to allow people to comparison-shop for competitive rates.
 
It can vary from model to model, but, in most cases, all inquiries of one of those types will be counted as one, provided they take place within a 14- to 45-day period.
 
A single inquiry is likely to drop your score by less than five points.
 
As an industry, mortgage brokers use a single secure system and can send that ONE credit report to multiple lenders if needed.  That five-point effect on your credit will rebound within a month. 
 
This allows for one-stop shopping with minimal impact on your credit score.  


Thomas Cook
Thomas@LivingInToronto.com
647-962-1650


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