Important points
Getting pre-approved for a mortgage usually means going through a tough credit check, which can lower your credit score.
Although it’s difficult to get pre-approved for a mortgage with a soft credit check, pre-qualification can help you explore loan options without affecting your credit score.
If you are seeking pre-approval, do it with multiple lenders at the same time to minimize the impact on your credit.
Comparing mortgage offers can help you find the lowest possible interest rate and ultimately save you thousands in interest. However, if you’re not careful with how you comparison shop, you can unnecessarily hurt your credit score and make it harder to qualify for the best mortgage rates. With some planning, a drop like this doesn’t have to happen.
Here’s how to get a mortgage without damaging your credit.
How does buying a mortgage affect your credit?
When considering your mortgage options, your credit score is typically only affected if you get pre-approval for a loan from a mortgage lender. That’s because getting pre-approval requires a “hard” credit check. This means that the lender will look at your credit history and score. Getting pre-approved for a mortgage with a soft credit check is difficult because lenders want to take a closer look at your financial history during this process.
Understand credit checks
Soft credit checks do not affect your credit score or require your permission. This is usually for informational purposes and not for making a lending decision. A hard credit check involves a lender pulling your complete credit report from a credit bureau with your permission, usually to assist in making a lending decision.
That being said, you can consider soft credit check mortgage options. If you get pre-qualified (a step down from pre-approval), you may not see a change in your credit score because pre-qualification involves a “soft” credit pull.
Can I get pre-approved for a mortgage without a credit check?
Still hoping for mortgage pre-approval through soft credit check? Sorry, you’re out of luck. A hard credit check is a standard part of the mortgage pre-approval process, so it’s highly unlikely you’ll get pre-approved without agreeing to it.
How to get a mortgage without damaging your credit
Here’s how to avoid hurting your credit score when shopping for a mortgage.
Buy a mortgage in a short period of time
If you’re ready to get pre-approved for a mortgage and want to compare offers from multiple lenders, try to do so within 45 days. That’s because this window shows all your credit checks from different lenders as one check on your credit report.
The score can be affected by a single inquiry, but not as much as multiple inquiries to the report. That being said, we recommend pre-qualifying well in advance of this period so that you have more time to compare rates and fees.
Get pre-qualified for a mortgage
Getting prequalified for a mortgage (some lenders call this an interest rate check) can be a smart strategy if you’re concerned about it negatively impacting your credit score when making comparisons. There is a possibility that This provides a soft credit check mortgage check option.
To pre-qualify you for a loan, lenders will check your credit report, but they may also do a “soft” investigation or “soft pull,” which pre-screens your report without affecting your score. will be carried out. In contrast, “hard” credit checks done when you get pre-approved or formally apply for a loan can negatively impact your score.
In other words, you can get pre-qualified without hurting your credit score. This allows you to compare prices and shop without this risk.
Please refrain from applying for new credit.
If you’re shopping for a home loan and also considering opening a new credit card or taking out a personal loan, here’s what to keep in mind. Inquiring multiple times about different types of credit can negatively impact your credit score and hinder your efforts to obtain a competitive mortgage rate. . If possible, wait until your mortgage is officially closed before applying for further credit.
Additionally, adding new debt can affect the loan amount you qualify for. The more debt you have, the less money you will qualify for for a mortgage.
Check your credit report
Whenever you apply for a loan, it’s important to know where your credit stands. Checking your credit report before you compare mortgages allows you to take proactive steps to improve your credit score if needed. You can also find and fix errors, putting you in the best position to get the lowest rates without accumulating unnecessary inquiries about your reports.
At AnnualCreditReport.com, you can get a free weekly copy of your credit report from the three major credit bureaus. Don’t worry. Checking your credit report will not affect your score.
repay a debt
Since your score isn’t all that high to begin with, you may be wondering how to get a mortgage without hurting your credit. If you can improve your credit score, one of the best ways to do so is to pay off debt, such as credit card balances. If possible, pay off your credit card balance in full. You’ll get bonus points to keep your balance as low as possible in the future.
But keep that in mind. From a mortgage qualification perspective, even if the interest rate on your credit card debt is high, it may make more sense to pay down or pay off another loan instead of using all of your extra funds to eliminate your credit card debt. There is a gender. That’s because mortgage lenders look at your debt-to-income (DTI) ratio in terms of monthly payments.
For example, if your student loan payments are higher than your credit card minimum payment, you may want to focus your debt repayment strategy on your loans, which will lower your DTI ratio. In these cases, it can be helpful to talk to an experienced loan officer who can advise you on the best way to qualify for the lowest interest rate.
Improve your credit score before getting a mortgage
The most competitive interest rates are only offered to borrowers with solid credit scores. If your credit score is 740 or above, you’ll get a lower interest rate and lower monthly payments.
To make sure your score is the best it can be, check for errors that could affect your credit report, such as incorrect contact information or missing a satisfactory loan report. If you need to dispute errors on your credit report, contact the credit bureaus immediately.
In the meantime, keep your past-due accounts current by making on-time payments each month. Also, to increase your utilization, pay off your credit card balances if possible and avoid applying for new cards or other large loans. It can also be helpful to become an authorized user of a relative’s credit card if they have a good payment history and manage their cards responsibly.
