Does Pre-Qualification Affect Credit Score?

A mortgage pre-qualification will provide you with an estimate of how much you might be able to borrow from a specific lender based on your self-reported finances, such as your income, debts and credit score. Getting pre-qualified for a mortgage usually doesn’t hurt your credit. Most lenders ask you to share an estimated credit score or check your credit with a soft pull to determine if you pre-qualify for a mortgage, which doesn’t affect your credit score. 

Keep in mind, not all lenders follow the same pre-qualification process and may need to run a hard credit check. Hard inquiries will affect your credit score. Always confirm with the lender beforehand whether they’ll use a soft or hard inquiry to verify your credit score. 

Soft inquiry vs. hard inquiry

To understand how pre-qualification impacts your credit, you’ll need to understand the difference between a soft pull and a hard pull. Pre-qualifications don’t usually affect credit scores, because no hard pulls, or hard inquiries, are involved. However, pre-approvals usually affect credit score, because hard inquiries are used. What makes Zillow Home Loans* unique is that we only use soft pulls for mortgage pre-qualification and pre-approval, meaning there is no impact on your credit.

Hard inquiries are triggered when the lender checks your credit with the intent of making a decision about your application. While a hard inquiry is often necessary to process a pre-approval or mortgage application, it can temporarily lower your credit score by a few points. When shopping for a mortgage, do so within the 45 day window. During this period, each hard inquiry for a mortgage is treated as a single inquiry, minimizing the impact on your credit.

Soft inquiries, on the other hand, don’t trigger anything on your report. They typically occur when an employer checks your credit as part of a background check or when you pull your credit report yourself. A soft inquiry is the most common type of credit inquiry conducted by lenders when pre-qualifying a borrower. 

However, some lenders use pre-qualification and pre-approval interchangeably. If you ask for a pre-qualification, a lender may assume you’re asking for a pre-approval and trigger a hard inquiry on your report. It’s always best to ask your lender whether they will use a soft inquiry or hard inquiry to provide you with a pre-qualification letter.

Benefits of getting pre-qualified

Pre-qualification allows borrowers to get an idea of how much they can afford without having to submit a formal loan application or trigger a hard inquiry on their credit reports. 

The pre-qualification process is pretty straightforward. Once a lender reviews your self-reported information, they can quickly determine the types of mortgages you pre-qualify for and the estimated loan amount you may  be able to borrow based on that information.

Here are some benefits of getting pre-qualified:

• You can establish a comfortable home buying budget to begin searching for homes now that you have a mortgage estimate. 
• You can compare pre-qualification offers from multiple lenders without hurting your credit score.
• You can share your pre-qualification letter with your real estate agent to show them you’re a serious buyer, or use the letter to strengthen your offer on a home.

When to consider pre-qualification 

It's best to get pre-qualified for a mortgage early in the home buying process, especially if you're just starting to explore your options. A pre-qualification will reveal how much you’re eligible to borrow, which gives you a comfortable price range to search within and an idea of what your monthly payments will look like.

Although a pre-qualification doesn’t guarantee loan approval, it gives you a good idea of how much money a lender is willing to finance towards your home purchase. Pre-qualification also usually does not affect your credit score, making it a low risk way to shop around and compare lenders. You can get pre-qualified with us at Zillow Home Loans* in as little as five minutes, with no impact on your credit.

Remember, getting pre-qualified provides borrowers with many benefits. You just want to double check with the lender beforehand that your credit won’t be affected in the process. Depending on the state, some lenders may require a hard credit inquiry to process your pre-qualification request. Consider getting pre-qualified with multiple lenders to compare offers, reduce loan fees, and maximize your loan amount.

*Zillow Home Loans; an equal housing lender. NMLS #10287.