By John Campbell
If you don’t shop around for a mortgage in a timely manner you could wind up lowering your credit score.
Every time a potential lender requests a copy of your credit report the inquiry will be listed on the report. You can usually maintain the same credit score if you have no more than a few inquiries on your credit report each year. Any more inquiries over the course of a year can start chipping away at your credit score. Multiple inquiries can indicate financial instability to many lenders while the lowering of your credit score may make it even more difficult to maintain decent credit.
Luckily, the rules regarding lender inquiries are more lenient when it comes to mortgages. From the moment your social security number is run through a mortgage lender any other mortgage lender inquiries shouldn’t count against you for 14 days. For 2 weeks you can let as many mortgage lenders check your credit as you like. This will help you find the best mortgage deal available without damaging your credit. If your credit is right on the borderline between excellent and good or good and bad you may not be able to afford even a few point drop in your credit score.
The best thing to do is spend some time planning ahead. Get copies of your credit report along with credit scores from the three national credit bureaus (Equifax, Experian and TransUnion). Make a list of lenders you may want to work with, contact them and see if you can find out what rates you may be approved for prior to having your credit checked. This can give you a nice ballpark figure of what lenders may offer better rates.
Once a potential lender has run your credit and officially preapproved you for a mortgage the clock will be ticking. If you don’t get preapproval offers from other lenders within that time frame you risk lowering your credit score.
You shouldn’t waste any time in locking in your preapproved mortgage offers. Don’t take your sweet time and risk your credit score or you could wind up paying a lot more for your mortgage than you ever bargained for.
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John Campbell is the writer and editor of CashBuzz, A financial portal for the rest of us. Check out cashbuzz.com for the latest articles on money management and tips and tricks that can help improve your finances. This article may be reprinted on your Web site if the copyright, author information and active link are included.
