How Many Times Can You Pull Credit for Your Mortgage Without Hurting Your FICO Score?

Written by James Hirby and Fact Checked by The Law Dictionary Staff  

If you're in the market for a new house, chances are good that you're acutely aware of your credit score. Depending upon its strength, your credit score can be a valuable asset or a problematic liability. In the wake of the housing bust of the late 2000s, mortgage lenders adhere to far stricter lending standards and require onerous down payments from prospective home-buyers. In 2005, it may have been possible to obtain a "no money down" mortgage with a credit score of 600. These days, it's difficult to find a mortgage that doesn't require a down payment of 10 percent of the home's value as well as a credit score of at least 650.

While there are exceptions to the credit-score rule, they may come with certain drawbacks. For instance, sub-prime mortgages typically carry interest rates that are several basis points above the "prime" rate. Although mortgage rates continue to be low by historical standards, this reality can make many mortgages uncomfortably expensive.

If you do have a solid credit score, you'll still need to talk to multiple mortgage lenders before accepting an offer. Since every lender adheres to slightly different standards, it behooves even the most creditworthy borrowers to obtain six to 12 mortgage quotes. Over the span of a 30-year mortgage, small changes in a loan's effective rate can dramatically affect its final cost. A mortgage that comes with an APR of 4 percent could cost thousands of dollars more than a mortgage that carries an APR of 3.7 percent. While there could be plenty of reasons to pass on a cheaper mortgage in favor of a more expensive loan, cost is a powerful motivator.

Unfortunately, the simple act of getting a mortgage quote can seriously damage your credit rating. In fact, most borrowers don't realize that "pulling" a credit score from one of the three major credit reporting bureaus is frowned upon by the lenders that request this information. While this might seem contradictory, it makes sense. A borrower who "pulls" a credit score is clearly in need of credit.

In fact, borrowers who perform this task repeatedly over short periods of time may look desperate to obtain credit. Since borrowers who are desperate for credit may borrow more than they can afford and become unable to repay their obligations, lenders are reticent to extend credit to them. Although the exact hit will vary, it's safe to assume that your credit score will drop by about 2 points per "pull."

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