April 16th, 2018 12:33 AM by Jackie A. Graves, President
things first, there are two types of credit pulls; a “soft pull” and a “hard
pull,” and there’s a stark difference between the two.
soft pull often happens without you ever knowing about it and doesn’t affect
your credit score. Sometimes these types of inquiries are done without your
permission, such as in the event you receive an unsolicited pre-approved credit
card offer in the mail or when a prospective employer pulls your credit as part
of a background check on you. Other times a soft pull happens when you check
your own credit score. And if either of these two things have happened, they
are categorized as soft pulls, and will not chip away at your score.
“hard pull,” on the other hand, can affect your
score. When you’re shopping around for a mortgage, it’s not uncommon for you to
speak with multiple lenders. And that means multiple requests for your credit
report. This can be concerning because with every “hard pull,” your score can
be impacted—unless each pull happens within a specific window. Credit bureaus
are aware that potential borrowers will “rate shop,” so you generally have
between a 14- to 45-day window, depending on which credit bureau, where all
pulls are consolidated and considered just one.
the purposes of applying for a mortgage, you can almost guarantee the lender
will do a hard pull of your credit report. This inquiry will stay on your
credit report for two years but will only impact your score for one year. It
can shave a few points off your score per inquiry so if you’re shopping around,
it’s important to shop around in a set amount of time to avoid being penalized
for each inquiry.
though these hard credit pulls will stay on your credit report for two years,
lenders will be able to see from your report that you’re shopping around for a
mortgage, so even if your score is a few points lower than you’d like thanks to
a hard inquiry, lenders may take your rate shopping into consideration when
assessing your history. A Read
more about ways to boost your credit score here.
there is a bit of a grace period to shop around for rates, take advantage. If
you shop and compare rates from lenders, you can potentially save thousands of
dollars. Because buying a home is one of the most expensive endeavors you’ll
have, saving any amount of money can be beneficial.
only will shopping around and comparing rates help you get the best deal but
reading lender reviews and knowing the ins and outs of the quotes you’re
receiving can help you avoid paying extra fees. You should talk through your
options with a lender and compare their rates with quotes from other lenders.
You can also anonymously request quotes from different lenders on Zillow.
also important to check your own credit score, so you know where you stand
before you request these hard pulls. If you know your credit isn’t quite where
you want it to be, you’ll have time to correct it before a lender pulls it to
evaluate you. And since soft pulls won’t negatively impact your score, you can
check your score with peace of mind.
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