How to Protect Your High Credit Score

So, you’re ready to start shopping for a mortgage, and your lender wants to “pull your credit”.  You’re worried it will harm your coveted credit score.  Today, the credit bureaus clearly address this concern and state that your score will not continually drop when mortgage lenders pulls your credit; that is, if it’s done correctly. 

When shopping lenders and taking credit checks, you’re going to lower your credit score.  It’s just how the system works.  However, there’s a right way and wrong way in doing so.   The first important concept is that unlike applying for multiple credit cards, when you apply multiple times for a mortgage, you won’t get dinged for multiple, consumer-initiated inquiries.  Let me explain.  When you apply for 5 credit cards, you’ll likely get the option to use all five.  By contrast, with mortgage applications, you’ll only be making one purchase.  As such, the credit bureaus have made a formal policy to permit “rate shopping”.  In fact, it’s encouraged.  This is why a mortgage credit inquiry is estimated to lower ones credit score by just 5 points.  With that said, there is a trick to it.

You have the right to shop with as many lenders as you like.  However, it is important to shop for your mortgage within a limited, 14-day time frame.  If you can manage that, the credit bureaus will acknowledge your first credit pull as a “ding”, but will ignore each subsequent check within this 14-day period.  This means that you can have your credit checked by an unlimited number of lenders within a 2-week period, enabling you to compare mortgage rates and fees.  No matter how many credit checks you do, the mortgage inquiries get lumped into a single credit score hit.

It’s a policy that’s good for you and good for the credit bureaus. Your credit scores stay high, while the three major credit bureaus (TransUnion, Experian and Equifax) get to collect more fees from the banks that are pulling your credit.

The credit bureaus explain how you can exploit the mortgage process to get very low rates:

1. Want the best rate? As they say, “shop around” for it.
2. Limit your rate shopping to 14-day time span to minimize your total credit “dings”
3. Give up your social security number so lenders can give accurate quotes instead of just guesses

The last one is important to consider because metaphorically, not letting your lender check your credit is like not letting your doctor check your blood pressure.  Sure, you can get a diagnosis when your appointment’s over, but it just might not be the right one.  Letting a lender see your credit score can mean the difference between a quoted 4.00% and a 5.00% mortgage rate; a conforming conventional mortgage or an FHA loan, underwriting approval, or an underwriting denial.

Not sure who to call or where to start? Contact me today for a 100% free no-obligation loan inquiry analysis.

Matt Pell,  Loan Officer
Mortgage Warehouse, LLC
(239) 672-8502 – Direct Line
(239) 344-9223 – Fax
Matt@mortgagewarehouse.com
www.facebook.com/themortgagewarehouse
Company NMLS ID – 137154
Individual NMLS ID – 1018529
Better Business Bureau Rating = A+