Credit checks coming from lenders are reported to the credit reporting companies as an “inquiry. ” An inquiry typically has a small negative effect on your credit scores. Inquiries can be seen by other lenders when they check your credit.
Inquiries tell other lenders that you are thinking of taking on new debt. An inquiry typically has a small negative effect on your credit scores. Inquiries are a necessary part of applying for a mortgage, so you cant avoid them altogether. But it pays to be smart about them. As a general rule, apply for credit only when you need it.
It is best to avoid applying for credit cards, auto loans, or other forms of credit right before or during the mortgage process as this can result in an additional inquiry that could lower your scores. Find out more about credit scores.
Yes, the underwriter will typically pull your credit again before closing. This is a standard practice for most lenders, and it’s done to ensure that your financial situation hasn’t changed significantly since you were pre-approved for the mortgage.
Here’s why lenders pull your credit again before closing:
- To verify your income and employment. The underwriter wants to make sure that you’re still employed and that your income is sufficient to cover the mortgage payments.
- To check for any new debt. If you’ve taken on any new debt since you were pre-approved, it could affect your debt-to-income ratio and make you less likely to qualify for the loan.
- To make sure there are no new negative items on your credit report. This could include things like late payments, collections, or charge-offs.
When will the underwriter pull your credit again?
The underwriter will typically pull your credit again within 30 days of closing. However, they may pull it sooner if there are any concerns about your financial situation.
What can you do to prepare for the second credit pull?
- Avoid taking on any new debt. This includes things like credit cards, car loans, and personal loans.
- Make sure your income is stable. If you’ve recently changed jobs, be prepared to provide documentation of your new income.
- Dispute any errors on your credit report. If there are any errors on your credit report, you should dispute them with the credit bureaus.
What happens if the underwriter finds something negative on your credit report?
If the underwriter finds something negative on your credit report, they may ask you to provide additional documentation or they may deny your loan.
Here are some additional things to keep in mind:
- The second credit pull will not affect your credit score as much as the first pull. This is because the credit bureaus know that you’re shopping for a mortgage and they will group all of the inquiries together.
- You can ask your lender to provide you with a copy of your credit report. This will allow you to see what the underwriter will see.
- If you have any questions about the second credit pull, you should contact your lender. They will be able to answer your questions and help you prepare for the process.
Frequently Asked Questions
How many times will a mortgage lender pull my credit?
The lender will typically pull your credit twice: once during the pre-approval process and once again before closing.
Will the second credit pull hurt my credit score?
The second credit pull will not affect your credit score as much as the first pull. This is because the credit bureaus know that you’re shopping for a mortgage and they will group all of the inquiries together.
What can I do to prepare for the second credit pull?
Avoid taking on any new debt, make sure your income is stable, and dispute any errors on your credit report.
What happens if the underwriter finds something negative on my credit report?
The underwriter may ask you to provide additional documentation or they may deny your loan.
Additional Resources
- How Many Times Will a Mortgage Lender Pull My Credit?
- Do Lenders Check Your Credit Again Before Closing?
The second credit pull is a standard part of the mortgage process. By understanding why it’s done and how to prepare for it, you can help ensure that your loan goes through smoothly.
Can I check my own credit with no effect on my scores?
Yes. Credit reporting companies do not handle consumer credit inquiries in the same way that they would a lender. This is true whether you are checking your own credit, whether it be your credit report or credit scores. Checking your own credit does not affect your credit scores. Check your credit report for errors immediately if you are applying for a mortgage and haven’t already done so. You can get a free copy of your credit report at annualcreditreport. com . If you find errors, get them corrected as soon as possible.
Does shopping around for a mortgage hurt my credit?
No. Multiple credit checks from mortgage lenders are reported as a single inquiry on your credit report within a 45-day period. This is because other lenders realize that you are only going to buy one home. You can shop around and get multiple preapprovals and official Loan Estimates.
No matter how many lenders you speak with, as long as the final credit check is completed within 45 days of the initial credit check, the effect on your credit will remain the same. It is usually worthwhile to shop around, even if a lender needs to check your credit after the 45-day period has passed. While making a second inquiry has little impact, looking around for the best price can end up saving you a significant amount of money.