How Your Credit Score May Affect Your Mortgage Application

Mortgage and Lending with Olympus Labs

One of the most important facts to keep in mind when you are thinking about how your credit score may affect your mortgage application is your credit score is different from your credit report. Your current credit score is determined based on an analysis of the information available in your credit report. Naturally, your credit score is subject to change based on various kinds of financial activities that appear in your credit report. It is crucial to check your credit score regularly in order to stay informed about your financial circumstances. This is especially true when you are applying for a mortgage. Your credit report is a summary of activity that affects your credit score, such as accounts, payment history, auto information, and tax history.

Now that we've covered the differences between your credit score and your credit report, it is important to take a look at how your credit score may affect your mortgage application. One way in which your credit score may affect your mortgage application is when a lender performs a soft credit search while in the process of considering your eligibility. A soft credit search is essentially an initial check that a lender might conduct during an inquiry. With your permission, the lender is able to obtain some basic information about your credit history. As stated previously, a lender must do this to see if they could work out an agreement with you even in a hypothetical sense. Soft credit searches leave behind a 'soft footprint' but these only remain on your account for up to 24 months. Furthermore, no amount of soft footprints will negatively impact your credit score.

Another piece of information that is useful to know about soft credit searches is that not all lenders do this. While many lenders do perform a soft credit search, it is best not to simply assume that this is part of the mortgage application process for all lenders no matter what. If you have a bad credit score, this might prevent you from moving forward in the mortgage application process with a certain lender after they perform a soft credit search.

Once a lender performs a hard credit search, your credit score will affect your mortgage application differently. A hard credit search is when a lender takes a closer look at your credit report in addition to your credit score. This lets them know how risky it is to accept your mortgage application. Your credit score will affect your mortgage application during a hard credit search because it may determine whether or not your mortgage application is accepted.

If your credit is good enough, it is likely a lender will accept your mortgage application even after a hard credit search. A hard credit search is visible to other potential lenders and multiple credit requests may impact your credit score. Learning more about Credit Score and Range Chart for a mortgage application is a good way to increase your chances of approval.



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Nina Hollander
Coldwell Banker Residential Brokerage - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

Great post, David. So many people think that credit score only impacts ability to get a mortgage but don't think in terms of it impacting interest rates and other conditions.

Jun 18, 2019 04:22 AM #1
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David Jackson, MBA

Financial lending analyst
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