Don’t fear multiple credit inquiries when mortgage rate shopping

November 11, 2021 - 6 min read

How many times can you pull credit for a mortgage?

Whether you’re a first-time homebuyer or homeowner looking to refinance, most borrowers worry about the impact multiple credit inquiries have on their credit scores.

After all, your credit score determines your interest rate, and a low interest rate can save you thousands of dollars during the life of your home loan.

The good news is, multiple inquiries from different lenders are typically counted as only a single inquiry — as long as they’re made within the same 14 to 45 days.

So if you’re concerned if rate shopping will hurt your credit, here’s what to understand about multiple credit inquiries for a mortgage loan.

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Key takeaways

You can shop with as many mortgage lenders as you want. And it’s in your best interest to apply with at least three.

The good news? Applying with more than one mortgage lender shouldn’t hurt your credit.

  • Each mortgage lender will do a ‘hard’ credit check
  • Multiple credit pulls only count as a single inquiry when mortgage shopping
  • However, you must get all your mortgage quotes within 14-45 days

As long as you shop for your mortgage within the 14- to 45-day window, you can typically get as many quotes as you want without worrying about multiple credit dings.

How many times mortgage lenders check your credit history

Many borrowers wonder how many times their credit will be pulled when applying for a home loan.

While the number of credit checks for a mortgage can vary depending on the situation, most lenders will check your credit up to three times during the application process.

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1. Initial credit check for preapproval

When homebuyers are ready to begin making offers on potential real estate, many of them get preapproved for a home loan.

Mortgage preapproval is a rigorous process where lenders verify the details on your loan application including:

  • Your income and employment
  • Account balances
  • Confirmation of any foreclosures or bankruptcies
  • Debt-to-income ratio
  • The source of your down payment

Loan preapproval is also when a mortgage lender pulls a copy of your credit report to evaluate your credit history.

This initial credit pull to become preapproved for a home loan is the first of potentially three hard credit inquiries during your loan application.

Some homebuyers confuse preapproval with prequalification.

Mortgage prequlaification is more of a general status where mortgage lenders gather self-reported details such as your marital status, social security number, debt payments, and other personal finance information to give you an idea of how much you can borrow.

2. Sometimes a credit inquiry during the mortgage application process

A hard pull on your credit report during the home loan application is not standard. But when a lot of time passes between being prepproved and closing on a home, then mortgage lenders may pull a second copy of your credit report.

Credit reports are typically only valid for 120 days. So if yours has expired, then the lender will re-pull your credit.

Also, if you’ve paid down debts, contested errors, and removed disputes from your credit history — then an additional hard pull could reveal a higher credit score, which, in turn, could lower the interest rate on your home loan.

3. Final credit check before closing

Because a lot of time can pass between the initial credit report and a closing date, your mortgage lender will take a final look at your credit before closing on your home loan.

Lenders use this final credit check to look for any new credit inquiries and determine whether or not those inquiries resulted in new debt or lines of credit, like a new credit card.

New debt can affect your debt-to-income ratio, so do your best to refrain from any type of financial activity that could negatively impact your home loan terms.

This final credit check before closing is a soft pull. Unlike a hard pull, a soft pull won’t impact your credit score.

Your mortgage lender wants to make sure that both credit reports match, and if they don’t, you may need to provide additional documentation or send your loan application through underwriting a second time.

How mortgage rate shopping affects your credit score

A credit inquiry occurs when a lender or other entity checks your credit.

Too many inquiries could have a significant impact on your credit score. It tells the lender that you are aggressively seeking credit.

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That could mean you are in financial trouble, or that you are about to get in “over your head” in debt.

According to MyFico, consumers who have six or more inquiries are eight times more likely to declare bankruptcy than people with no inquiries at all.

Seeking too much credit in a short period, then, drags down your credit score. A lower credit score typically means a higher interest rate, and a harder time getting a mortgage.

For most people, though, a hard credit pull affects their credit scores by less than 5 points.

The negative impact will vary according to the type of creditor behind the inquiry, the type of loan, and the strength of the homebuyer’s current credit profile.

Two types of credit inquiries: hard and soft

There are two types of inquiries that can occur on your credit report – hard inquiries and soft inquiries, also called “hard pulls” and “soft pulls.”

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Both types of inquiries allow third parties to examine your credit, but only hard inquiries will pull your scores down.

Hard inquiries occur when a financial institution checks your credit report to make a lending decision. Hard inquiries are common when you apply for a mortgage, auto loan loan, personal loan, student loan, or a credit card.

Soft inquiries occur when a person or entity checks your credit as part of a background check. Unlike hard inquiries, soft inquiries will not negatively affect your credit scores.

So how many times can you pull credit for a mortgage without it impacting your credit score?

Credit scoring models determine the window of time where multiple credit inquiries for a mortgage count as only a single inquiry.

There are two main credit scoring models, FICO and VantageScore, and different lenders choose whatever model they prefer.

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Newer versions of FICO score offer homebuyers a 45-day window for rate shopping. Whereas older versions of FICO and VantageScore 3.0 narrow that period of time to only 14 days.

So it’s important to speak with your lender about the credit scoring model they’re using.

But if you’ve yet to decide on a mortgage lender, it may be best to take a conservative approach and keep rate shopping to two weeks, rather than 45 days.

Pull your own credit report

Consumers today have relatively easy access to their credit reports.

All three bureaus — Transunion, Experian, and Equifax — allow for one free copy of your credit report per year through a program called Annual Credit Report. These reports show your account history, but not your score.

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Various websites allow you to see your credit scores for a fee. Just keep in mind that these services often show you a higher credit score than your lender will pull.

The only way to get a mortgage credit score is through a lender.

Before having several lenders pull your credit, though, it’s a good idea to do some research on your own.

By doing a little due diligence, you’ll not only have an idea of what’s on your credit, but you may also uncover possible inaccuracies that you can clear up. Doing so can ensure you’re getting the possible mortgage rates and terms.

Today’s mortgage rates

Whether you’re buying a new home or refinancing an existing mortgage, it pays to shop around. Fortunately, the credit bureaus won’t “ding” you for having multiple inquiries due to rate shopping.

Get today’s live refinance rates now. Your social security number isn’t required to get started, and all quotes come with access to your live mortgage credit scores.

Time to make a move? Let us find the right mortgage for you

Craig Berry
Authored By: Craig Berry
The Mortgage Reports contributor
With over 20 years in mortgage banking, Craig Berry has helped thousands achieve their homeownership goals.