Credit Score Tips

A key rule for homebuyers: Don't do anything that would hurt your credit score.
But a lot of savvy Internet users hurt their credit scores inadvertently because the act of applying for a mortgage can, by itself, lower a borrower's credit score, and applying is easy to do online. A loan inquiry raises a red flag to lenders, suggesting a possible financial problem, and multiple loan inquiries automatically lower a credit score if done over a period of time.

To offset problems for mortgage shoppers, most credit scores ignore multiple mortgage applications submitted within the 30 days prior to a credit check because they assume people will shop around for the best rate. Beyond 30 days, credit scores will consider mortgage inquiries as separate events within each 14-day period. Anyone who shops for a loan for three months could find themselves getting offers and interest rates that are progressively less attractive. Best advice for your buyers: Use the Internet for research but only apply for a mortgage when you're ready to make a commitment, apply to a handful of companies, and make a decision within 30 days.