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Credit Score Information & What to Know About “Rate Shopping”

Did you know nearly half of borrowers don’t shop around for the best rate before applying for a mortgage, and even if they do, only 3 out of 4 end up applying to more than one lender or mortgage broker.

Looking for a mortgage, auto or student loan may cause multiple lenders to request your credit report, even though you are only looking for one loan. To compensate for this, the score ignores mortgage, auto, and student loan inquiries made in the 30 days prior to scoring. So, if you find a loan within 30 days, the inquiries won't affect your credit score while you're rate shopping. In addition, the score looks on your credit report for mortgage, auto, and student loan inquiries older than 30 days. If it finds some, it counts those inquiries that fall in a typical shopping period as just one inquiry when determining your score.

For FICO scores calculated from older versions of the scoring formula, this shopping period is any 14 day span. For FICO scores calculated from the newest versions of the scoring formula, this shopping period is any 45 day span. Each lender chooses which version of the FICO scoring formula it wants the credit reporting agency to use to calculate your FICO score.

The moral of this article is not all lenders are created equal and it is important for you to shop around for the best interest rate and fees. If you are looking for homes for sale in Albuquerque and Rio Rancho NM we can refer you to a great lender. Search for homes here