How to Shop For a Mortgage Without Hurting Your Credit

Shopping around for a mortgage can help you secure the best rates, terms, and fees. However, applying for a mortgage, and sometimes getting pre-approved, will trigger a hard inquiry, which can temporarily lower your credit score by a few points. Depending on how low your score is, this temporary drop could make it difficult for you to get a mortgage. For this reason, it’s important to minimize the impact on your credit as much as possible when shopping around for a mortgage.

Try to shop for a mortgage within a short timeframe — typically 14 to 45 days. During this period, multiple hard inquiries for a mortgage are usually treated as a single inquiry, minimizing the impact on your credit. Additionally, focus on getting pre-qualified first, as this typically involves a soft inquiry that won’t affect your score.

Here are some steps you can take to avoid hurting your credit score or minimize the impact on your credit when shopping for a mortgage. 

Check your own credit report

You can check your own credit without impacting your score for free once a year. All you have to do is go to annualcreditreport.com. Checking your credit report before starting your mortgage search is an important step in taking control of your financial health. Your credit report provides a detailed summary of your credit history, including loan payments, credit card usage, and any outstanding debts.

Regularly reviewing your credit report will help you catch errors, spot fraudulent activity, and understand how lenders view your creditworthiness. Here are some common mistakes to look out for on your report:

• Incorrect name, address, or phone number
• Unfamiliar accounts belonging to similarly named owners 
• Unfamiliar accounts resulting from identity theft
• Closed accounts reported as open
• Open accounts reported as closed
• Accounts mistakenly labeled as delinquent
• Debts that appear more than once
• Inaccurate account balances or credit limits

By staying informed, you can take proactive steps to improve your credit score and ensure that your financial future is on the right track. Make it a habit to check your credit report and stay one step ahead in managing your finances.

Verify credit score requirements before applying

Depending on the type of mortgage you’re applying for, a lender’s credit score requirements may vary. Generally, a favorable credit score is in the high 600 and 700s. Some FHA lenders may qualify borrowers with a credit score as low as 500 when they make a down payment of at least 10%. Other lenders may not go lower than a 600 credit score.

Be mindful that mortgage applications typically require a hard credit check, which could bring your credit from good to fair, or from fair to poor depending on where your credit score range falls. Make sure your credit is in good standing and you’re ready to buy a home, before shopping around for a mortgage to reduce the number of hits to your credit. When your credit score dips too low, it can make it more difficult to get approved for any type of financing.

Shop for a mortgage within a short timeframe

Every time you apply for a mortgage or get pre-approved, a lender runs a hard inquiry. Hard inquiries temporarily lower your credit score by 5-10 points. Most scores drop by less than 5 points, especially if the borrower has a good credit history, according to FICO. Hard inquiries that run for the same line of credit within a 45-day period count as a single inquiry, lowering the impact on your credit. 

If you were to get pre-approved on January 1st, you would have until about mid-February to apply for a mortgage loan or get pre-approved with another lender without triggering a second hard inquiry. 

Credit bureaus, like Equifax, Experian and Transunion, understand that multiple hard credit inquiries within a 45-day window are likely related to loan comparison shopping, so they count all pre-approvals and mortgage loan applications submitted during this time, as one. When you're ready to compare mortgage rates, fees and terms, get pre-approved or submit multiple loan applications within a 45-day window.

Get pre-qualified

Getting pre-qualified with a soft credit check does not hurt your credit. Many mortgage borrowers comparison shop by getting pre-qualified with multiple lenders to identify the top three lenders who offer the best loan estimates. A pre-qualification isn’t required to get a mortgage, but is a great way to shop around for a mortgage without hurting your credit before you take the next step to get pre-approved or apply for a mortgage. 

Avoid applying for new credit

Lastly, avoid applying for new credit while shopping for a mortgage. Hard credit inquiries are triggered by any type of credit request, not just mortgages. Multiple inquiries for different types of credit could significantly lower your score. Although multiple hard inquiries related to a mortgage loan are only counted once, unrelated hard pulls — such as a new credit card or auto loan — are counted separately and may lower your score more. 

Pro tip: Adding new debt can also increase your debt-to-income (DTI) ratio, which could change any previous loan estimates you received and impact your ability to get approved for a mortgage. It’s best to wait to apply for a personal loan or new credit card until after you’ve closed.

Final thoughts on shopping for a mortgage without hurting your credit

Shopping for a mortgage without hurting your credit score is possible. You can protect your credit by applying for mortgage loans within the same 45-day period and avoiding seeking new lines of credit during that time. You should also check your credit report to resolve any issues before you shop for a mortgage. Use a Mortgage Calculator, speak to a mortgage expert and consider pre-qualification to help you get an estimate of your affordability before embarking on your home buying journey. You can get pre-qualified with us at Zillow Home Loans* in as little as five minutes, with no impact on your credit.

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