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Richard Airey

Does shopping for a mortgage hurt my credit score?

Friday, June 14, 2013 - Article by: Richard Airey - First Financial Mortgage - Message

This is the most common misconception that I encounter as a Loan Officer. Most people are under the impression that multiple credit inquiries in a short period of time will lower their scores. This is only partially true. The truth is: It depends on who is pulling your credit!

What to know about "rate shopping." Looking for a mortgage, auto or student loan may cause multiple lenders to request your credit report, even though you are only looking for one loan. To compensate for this, the score ignores mortgage, auto, and student loan inquiries made in the 30 days prior to scoring. So, if you find a loan within 30 days, the inquiries won't affect your score while you're rate shopping. In addition, the score looks on your credit report for mortgage, auto, and student loan inquiries older than 30 days. If it finds some, it counts those inquiries that fall in a typical shopping period as just one inquiry when determining your score. For FICO scores calculated from older versions of the scoring formula, this shopping period is any 14 day span. For FICO scores calculated from the newest versions of the scoring formula, this shopping period is any 45 day span. Each lender chooses which version of the FICO scoring formula it wants the credit reporting agency to use to calculate your FICO score.

Improving your FICO score. If you need a loan, do your rate shopping within a focused period of time, such as 30 days. FICO scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur. Generally, people with high FICO scores consistently:

Pay bills on time.
Keep balances low on credit cards and other revolving credit products.
Apply for and open new credit accounts only as needed.
Watch an informative video on how to improve your FICO score.

Also, here are some good credit management practices that can help to raise your FICO score over time:

  • Re-establish your credit history if you have had problems. Opening new accounts responsibly and paying them on time will raise your FICO score over the long term.
  • Check your own credit reports regularly, before applying for new credit, to be sure they are accurate and up-to-date. As long as you order your credit reports through an organization authorized to provide credit reports to consumers, such as or, your own inquiries will not affect your FICO score.

To summarize: Shopping for your best deal is extremely smart. Particularly when shopping for the single largest transaction you are likely to engage in: Your Mortgage!

It never ceases to amaze me how consumers will shop extensively to save a few pennies on gas and groceries, but they will usually use the first mortgage company or bank they contact! Your mortgage should be the most important thing to educate yourself on, and do your homework! It could save you literally tens of thousands of dollars. And, as you've learned, your credit scores will be fine!

Visit my website for more information or to obtain a no obligation quote in Maine.

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