Getting preapproved for a mortgage, obtaining a precise mortgage rate quote or applying for a mortgage all typically involve authorizing your lender to access your credit information. Many consumers are concerned that this will lower their FICO Scores, but the impact is usually very minor and temporary. Here’s what you need to know about credit inquiries and your FICO Score.
What is a credit inquiry?
A credit inquiry or “pull” is when a lender requests your credit information from a credit bureau when deciding whether to extend credit to you. A “hard pull” is an inquiry that requires your permission, and only hard pulls can impact your credit score.
How much do inquiries impact your score?
The exact impact of a hard pull on a FICO Score varies from person to person but is generally very small. For the average person, a hard pull will take just five points or less off their FICO Score, which ranges from 300 to 850 points. Hard pulls only impact your credit score for one year, mostly during the first six months, and they’re removed from your credit report entirely after two years.
Do mortgage inquiries have the same impact?
In general, mortgage-related pulls have even less of an impact than pulls for items like credit cards. With most FICO scoring models, all hard pulls within a 30-day period for the same loan type relating to mortgage, auto or student loans are treated as just one inquiry.
How to use this information
When getting a mortgage, you can rest assured that mortgage-related credit pulls have a very minor and temporary effect on your score. For the smallest impact, ensure that all your mortgage-related pulls occur in a 30-day period, so they will be treated as a single pull. Credit pulls are good for 90 days, so be aware that your lender will need to pull your credit again if your closing occurs later than 90 days from the pull.
You can read more about credit inquiries and your FICO Score straight from the source at the FICO company page here.