Mortgage Inquires? How many is too many
Multiple Mortgage Inquiries
When you're shopping around for a mortgage, it's natural to compare offers from different lenders to ensure you're getting the best deal. A common concern among borrowers is that multiple mortgage inquiries might hurt their credit score.
Marcel and Jan Deitrich with Texas Loan House have decades of experience guiding home buyers and those interested in refinancing through the process.
Why Multiple Mortgage Inquiries Only Affect Your Credit Score as One Pull
Fortunately, credit scoring models used by Experian, TransUnion, and Equifax have built-in protections for this exact scenario. Let's break down why multiple mortgage inquiries are generally treated as a single credit pull and how this works to your advantage.
How Credit Inquiries Affect Your Score
Before diving into mortgage-specific rules, it helps to understand the basics of credit inquiries. Credit inquiries come in two types:
Soft Inquiries: These occur when you check your own credit or when a company checks your credit for a pre-approval offer. Soft inquiries have no impact on your credit score.
Hard Inquiries: These happen when a lender pulls your credit report as part of their decision-making process for loans, credit cards, or other credit products. Hard inquiries can affect your credit score, though usually only by a few points.
Mortgage Shopping Windows: The 14- to 45-Day Rule
Credit scoring models recognize that consumers need to shop around when looking for the best mortgage rates, so they allow multiple inquiries within a specific time frame to count as a single inquiry. The exact window during which these inquiries are grouped together depends on the credit scoring model used:
FICO Score: The most widely used credit scoring model provides a shopping window of 45 days. Any mortgage inquiries made within this period will be treated as a single inquiry, minimizing the impact on your credit score.
VantageScore: This model uses a 14-day window for treating multiple inquiries as one. Although the timeframe is shorter, it's still designed to encourage rate-shopping behavior without penalizing you.
No matter which model is being used, the idea is to give you enough time to find the best mortgage deal without damaging your credit score with multiple inquiries.
Why Credit Bureaus Group Mortgage Inquiries Together
The three major credit bureaus—Experian, TransUnion, and Equifax—all understand that shopping for a mortgage is different from seeking out multiple credit cards or personal loans. When you're looking for a mortgage, you're typically only going to accept one offer, not several. Here's how each bureau views these inquiries:
Experian: Groups all mortgage-related inquiries within the shopping window into a single entry on your credit report. This means that if you apply for mortgage pre-approvals with multiple lenders within a short time, Experian will treat it as a single inquiry, reducing its impact on your score.
TransUnion: Also applies the same principle, grouping multiple mortgage inquiries into one pull when they're made within the designated shopping window. This allows borrowers to compare rates without fear of drastically lowering their score.
Equifax: Like the other bureaus, Equifax combines mortgage inquiries into a single entry if they occur within the specified period. This approach helps protect your credit score from unnecessary damage when you're actively seeking a home loan.
Why Multiple Mortgage Inquiries Won’t Hurt Your Score Significantly
There are two main reasons why multiple mortgage inquiries don't drastically lower your score:
Recognizing Responsible Behavior: Credit scoring models are designed to reward responsible financial behavior. Shopping around for a mortgage is considered a smart financial decision, not risky behavior like applying for multiple credit cards.
Minimized Scoring Impact: Even if a mortgage inquiry does affect your score, it's usually by only a few points. These minor changes won't significantly impact your creditworthiness in the eyes of lenders, especially if your overall credit profile is strong.
Tips for Smart Mortgage Shopping
To make sure you're optimizing your credit score while looking for a mortgage, follow these tips:
Time Your Inquiries Strategically: Aim to complete your mortgage inquiries within the 14- to 45-day window to ensure they count as a single credit pull.
Know Your Credit Score Before Applying: Check your credit score before you start shopping around to see where you stand and take care of any issues that might hurt your chances of getting the best rate.
Avoid Applying for Other Credit Products: During your mortgage shopping period, try to avoid applying for new credit cards or personal loans, as these can increase the number of hard inquiries on your report.
Final Thoughts
Understanding how credit scoring models handle mortgage inquiries can help you shop around for the best rate with confidence. By knowing that multiple mortgage inquiries within a short period will be treated as a single credit pull by Experian, TransUnion, and Equifax, you can make more informed decisions without worrying about damaging your credit score.
At Texas Loan Haus, we encourage our clients to find the best mortgage solution that fits their needs. If you have any questions about how your credit score affects your mortgage options, feel free to reach out to our experienced team for personalized guidance and support. We're here to help you navigate every step of your home-buying journey.
Marcel Deitrich
Texas Loan Haus
972.672.3246
[email protected]
NMLS# 231135
