Here is the newest (and accurate) information about credit inquiries.
A credit inquiry is when a company pulls your credit report when you make an application for credit.
The last thing you want is for your credit score to go down while you’re shopping for a home loan. Here’s what you need to know:
- For lenders using FICO 04, you have 30 days to shop for a mortgage, automobile, or student loan without having a penalty to your credit. No matter how many credit pulls you have in that time period, it will count as only one credit pull. (This is pretty much all mortgage lenders.)
- For lenders using FICO 8 and 9, you have 45 days. But this is virtually no mortgage lenders, so in reality, it only applies to automobile loans and student loans. (Ask if they are using FICO 4 or FICO 8 or 9 to be sure of the 45 day timeline as opposed to 30 days.)
- For credit cards, store cards, or lines of credit, there is no grace period. Every credit pull counts separately, and is subject to lowering your credit score.
If you need a credit card, don’t worry about the minor hit to your score, because establishing credit is part of the process.
If you already have three lines of credit and will be buying a home soon, avoid opening any new credit. Believe me, a 10 percent discount on merchandise is not worth taking a higher interest rate on your $200,000 home loan because your score dropped. Don’t risk it!
And remember, NEVER NEVER take out an automobile loan, finance a computer, appliances, or furniture, or open any other new credit six months before applying for a mortgage loan. You don’t want to risk lowering your credit score right when you’re trying to get a low rate for your home.