Does Applying For A Mortgage Affect Your Credit Score?
(Published on - 9/2/2020 5:38:48 PM)
The current ups and downs in the global economy are affecting almost everyone. Today, keeping one’s credit score high is harder than ever. However, the changing economic trends have led many to make significant financial decisions, such as applying for a mortgage.
More people are now realizing the need to own real estate because it ensures them of their secure future. As great as owning some property sounds, not everyone can afford to purchase a home for cash. Hence, many people choose to take out a mortgage - something that can affect their credit score.
If you’re worried about your mortgage application affecting your credit score negatively, keep reading to see what you can do!
What Is Mortgage Pre Approval?
Understanding mortgage pre approval is an essential step in learning how a mortgage application can affect one’s credit score. Applying for a mortgage requires the applicant to get their credit inquired from a credit bureau. Such an inquiry helps the lender decide if you are qualified get a mortgage or not.
Simply defined, a mortgage pre approval is a certification showing that the applicant’s credit and finances have been carefully looked at by a professional. Generally, people provide their income, assets, finance, debts, and other such details to a loan officer for inquiry. The officer looks at these details and determines the amount that the applicant can afford to pay each month and also determines the interest rate and the maximum amount that the bank is willing to lend the applicant.
This report is generally referred to as a mortgage pre approval.
How Mortgage Pre Approval Affects Your Credit
Undoubtedly, repeated credit checks and inquiries can be detrimental to your credit health. However, this is not the case with every inquiry. Many people think that getting a mortgage pre approval will always affect their score. The truth is, the kind of inquiry that is done by the loan office is what decides whether your credit is affected or not.
An inquiry about your credit can either be a hard inquiry or a soft one. Hard credit inquiries are only performed if you allow them. These are detailed and look at each of your financial aspects very closely. Such inquiries do affect your credit score negatively. On the other hand, soft inquiries are surface-level credit checks that can be done without your permission and don’t affect your score at all.
How to Get Your Credit Ready for a Mortgage
Getting your credit ready for mortgage pre approval is not difficult. Here’s what you can do:
- Try to pay your debts on time.
- Maintain your credit score on a good range.
- Ensure a better credit history with no negative score or late payments.
- Work with a credit repair company if you find it necessary.
All these steps will make your credit report better. This, in turn, will help you get mortgage approval easily.
For assistance with obtaining a pre approval or to determine your credit score, contact Realty Executives Exceptional Realtors® at (866) 742-5732 or email us at ClientCare@RealtyExecutives.com.
