Does a Credit Score Lower When Pulled for a Mortgage?

Timing your mortgage applications close together minimizes the damage to your credit score.
i NA/ Images

When you apply for a mortgage, lenders typically pull your credit score to assess how creditworthy you are. Each time the lender pulls the score, another inquiry goes on your credit report, which can lower your score. However, not only is the impact likely to be small, but you can also take extra steps to further minimize these dings on your credit score.

Small Negative Impact

According to the Fair Isaac Corporation, which runs the FICO credit scoring system, if you have a large number of inquiries on your credit report, you're more likely to declare bankruptcy in the future. However, it's not a heavily weighted factor. As a result, each inquiry on your credit report may lower your credit score slightly. Fair Isaac suggests that typically your credit score will go down by less than five points if you have multiple inquiries on your credit report -- which usually isn't a big deal.

Short-Term Effects

When you're applying for mortgages, your credit score doesn't include credit inquiries for mortgage applications that you've made within the last 30 days. This means you can "rate-shop" at different lenders for up to 30 days before your initial applications begin to affect the credit score. For example, if you apply for a mortgage with Bank A on January 5, that inquiry won't show up on your credit score if you apply for a mortgage at Bank B on January 25.

Limiting the Dings

If you're applying for a mortgage with several different lenders, you can limit the damage to your credit score by applying in a short period of time. According to the Fair Isaac Corporation, your credit score will count all mortgage applications within a certain time period as just one inquiry. The time frame depends on which version of the credit scoring formula is used, but it ranges from 14 days to 45 days. For example, if you apply to three banks for a mortgage within a week, your credit score will treat those three credit inquiries as just one.

Long-Term Effects

The inquiries from applying for a mortgage remain on your credit report for two years. However, the FICO credit score only considers inquiries from the past 12 months. As a result, one year after you've applied for the mortgage, your credit score won't be affected by the inquiry any more.

the nest