Personal Finance

getting multiple mortgage pre-approvals damage my credit rating?

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  • Nov 9th, 2013 11:40 pm
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[OP]
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Mar 12, 2005
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getting multiple mortgage pre-approvals damage my credit rating?

Hi RFD,

I'm looking for some advice as I start to plan my purchase of a new home down the road. I don't understand very much about getting the mortgage process started, so hopefully someone can point me in the right direction.

I want to know if getting multiple pre-approvals for a mortgage is going to ultimately hurt my credit rating. The reason I ask is because my plan is to go to different banks to see what each bank can offer (low/competitive rates, features like lump sum payments, etc) when I move forward with a pre-approval. If I don't use it within the 90 or 120 days, I can just let it expire. Is it wise for me to do this in case I buy a house in the near future?

The other option I was thinking was to just make appointments at different banks to speak with them to get some information about their mortgages, but not actually go through with any pre-approvals. However, with this option, I feel that they won't be able to give me a good rate because I won't look seriously interested (because I'm not actually going through with a pre-approval).

A little help?
26 replies
Banned
Nov 27, 2006
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No to title of thread
Deal Addict
Aug 14, 2007
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Don't worry about it, they know you will be mortgage shopping anyways. Will your score drop? Maybe but not much more than perhaps 10-20 points. I think my score dropped about 10 points from 5 inquires when I was mortgage shopping
The only time MAYBE i would worry about it is if you are on borderline anyways, and in that case I would probably just work with a broker anyways
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Nov 23, 2005
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Search the forum. There is a thread where this has been discussed.
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Aug 14, 2007
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why are you telling me to search it?
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Apr 16, 2007
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Financial District B…
sumrandomguy wrote:
Nov 6th, 2013 1:25 am

I want to know if getting multiple pre-approvals for a mortgage is going to ultimately hurt my credit rating. The reason I ask is because my plan is to go to different banks to see what each bank can offer (low/competitive rates, features like lump sum payments, etc) when I move forward with a pre-approval. If I don't use it within the 90 or 120 days, I can just let it expire. Is it wise for me to do this in case I buy a house in the near future?
The software that most financial institutions use are inquiry-coded for the credit product they specialize. Mortgage loan funders systems are 'mortgage coded' so your bureau scores won't experience severe impact when shopping for a mortgage. Same policy for auto loans. The only exception is at branch level where they may have to manual select mortgage code input because obviously at branch they offer all types and classifications of loans.
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Vladimir wrote:
Nov 6th, 2013 3:42 pm
why are you telling me to search it?
Sorry, quoted you by accident. My response was to OP.
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Mar 31, 2009
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Look online for the best rates that mortgage brokers will give you, it might reduce the number of times that you feel a need to actually get pre-approved because those mortgage broker rates are basically what you're going to get. Look for the best rate from any mortgage broker, and get pre-approved for that rate. Then maybe go to the bank that you have the best reputation with and ask them if they can beat that rate. So that would mean you'd suffer 2 hits, no big deal.

Unless your credit rating is really marginal to start with, having it go down a bit is not going to matter at all. My credit rating went down like 40 points applying for credit cards and mortgage pre-approvals over the course of a couple months. It didn't matter at all.
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Jul 11, 2010
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unknownone wrote:
Nov 6th, 2013 7:13 pm
Look online for the best rates that mortgage brokers will give you, it might reduce the number of times that you feel a need to actually get pre-approved because those mortgage broker rates are basically what you're going to get. Look for the best rate from any mortgage broker, and get pre-approved for that rate. Then maybe go to the bank that you have the best reputation with and ask them if they can beat that rate. So that would mean you'd suffer 2 hits, no big deal.

Unless your credit rating is really marginal to start with, having it go down a bit is not going to matter at all. My credit rating went down like 40 points applying for credit cards and mortgage pre-approvals over the course of a couple months. It didn't matter at all.
It was the credit card applications that caused the drop. Each credit card application counts as a hard hit. Possibly the preapprovals a little as you said they were over a couple of months. Try to get all mortgage credit inquires done in a 2 or 3 week span.
Doug Boswell
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Jan 19, 2009
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what the hell is the point of pre-approvals, and worst off why you even pulling your credit?....preapprovals dont mean anything, when you actually have an accepted offer, they start the real application then. If you still insist on a preapproval don't get them to pull your credit.
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Detailed and evaluated pre-approvals are very useful and valuable to consumers as it determines and confirms creditworthiness, mortgage capacity, approx or exact rate ranges.
There's nothing worse than people committing to buy a high ticket items such as a home or auto and not know that they have the capacity to service its monthly commitment.
Don't confuse CC pre-approvals with mortgage pre-approvals. Two different things.
----------------------------Licensed Credit Bureau member, S1, FI Automotive, CCP forums most banned = x 13 and counting, guess who that is?... stomped to the curb once again
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Mar 31, 2013
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Your credit score only matters if you are trying to get credit. As others have said, unless your score is very marginal, why worry?
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Jul 11, 2010
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Also the mortgage preapproval secures a rate for you. If rates were to go suddenly during the time frame you would get the preapproval rate. We saw 5 year rates jump significantly a few weeks ago wjth the cause economic news from the US. Preapprovals do serve a useful purpose for those setting out to look for a home.
Doug Boswell
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Apr 4, 2013
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You shouldn't get a mortgage pre-approval just to let it expire, and you shouldn't use a pre-approval to get the best rate, as chances are you won't get the best rate for a pre-approval. A pre-approval only looks at one side of the equation - and that is the borrower. It does not look at the house and you cannot get a mortgage without a home. The very best rates are reserved for folks who have an offer in hand with a firm closing date. These are considered "serious" buyers and get the most attention from all lenders and hence the best rates.

If you are worried at all about your credit, I would suggest that you request a copy of your credit report, along with your credit score, yourself. You can then show it to all the mortgage brokers and banks that you want and they can give you an idea of how much you would qualify for without requesting another copy of your bureau.

Getting multiple pre-approvals can actually hurt your credit report if you do not do it quickly. While it is generally true that Equifax counts multiple credit requests within a short period of time as 1 request, it must be within a short period of time. It is generally recommended that you do this within 2 weeks or less. But why take the chance - request your own and then you can show it to lenders and not worry about it at all.
Sr. Member
Jan 19, 2009
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you dont need to pull credit to secure a rate, a lender can just put a shell application on the system and it locks in the rate for 90 days....

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