Every day, we get borrowers who are shopping their mortgage around and who say, “I don’t want my credit report pulled again.” They are worried that too many credit report pulls will drop their credit score.
However the rules for credit reporting agencies state that if the same kind of entity (such as several mortgage companies) are pulling the credit, it will not be affected. Within the same business category, the first company pulling the credit will have the same score as the 10th company.
The government did this to allow consumers to shop their mortgage around so the credit score would not drop. It will drop, however, if they have a mortgage loan pull combined with another type of loan pull, like a car loan or credit card in the same month.
Here are some tips for consumers regarding the credit score. First, a score will drop if credit card balances are maxed out, so keep your credit card balances at 25% of the limit. Never let the balance go above 25%– in other words, don’t charge it up past 25% and then pay it down; just never let the credit card balance get above 25%.
Paying down credit card balances are the easiest way to improve a credit score. Never be late on your payments; any payment on a loan or credit card that’s 30 days late will tank your credit score. And that makes a big difference in the mortgage rate you’ll be able to get on a new mortgage or a refinance.
If we can help in your mortgage process, contact Indigo Mortgage.