Question:
“Two questions. I’ve heard that every time a banker runs my credit for a mortgage, it actually hurts my credit. Is that true? And does it hurt my credit more to shop several lenders?”
Answer:
First of all, your credit is only impacted if a mortgage lender actually runs your credit. A conversation won’t hurt you.
If they do run it, that lowers your FICO score by just 5 points…out of a possible 850 points. Not much.
But if you have it run 5 times, does that lower it by 5×5 = 25 points? That would be a lot!
Nope. The good news is that having your credit run by multiple mortgage lenders does NOT hurt your credit further if done within a 14-45 day period.
Why won’t it hurt your credit?
Let’s contrast it with credit cards. If you apply for five credit cards, your credit gets “dinged” for each application. That’s because you may get all five and take on debts on all of them.
However, if you apply for five mortgages, typically you’ll only get one mortgage, not five. So you’re only dinged for one. They understand that you’re shopping lenders and won’t get multiple mortgages.
Why the 14 to 45 day period?
The scoring “model” sees this as a normal period to shop lenders. And it’s 14, 30, or 45 days depending on what model a lender uses.
