INTERESTING FACT that most people do not know

Shop Multiple Lenders, Get One "Ding" On Credit

With mortgage rates low, you'll want to shop multiple lenders to get your best deal. However, as you'll learn through the process, each lender may want to pull your credit, putting another "hit" on your report.

Thankfully, the FICO system has your back. You won't harm your score when multiple lenders pull your scores. The system is built with consumer protection in mind.

Here's what you need to know.

First -- unlike when you apply for multiple credit cards at one time -- when you apply for a loan with multiple lenders at once, you get dinged for New Credit only once.

This makes sense. When you apply for 5 credit cards, you'll get the option to use all five. With multiple mortgage applications, though, you're applying to get one mortgage.

Furthermore, the credit bureaus like to see some "rate shopping". A consumer who shops for the best mortgage rate is more likely actually get it which, in turn, begets lower rates and payments.

And this leads us to the second important point.

In the FICO scoring model, you are given the right to shop with as many lenders as you like, with a caveat.

So long as you shop for your mortgage within a limited, 14-day time frame, you can have your credit checked by an unlimited number of lenders and have it count against your score just once. The bureaus will acknowledge your first credit, then ignore each subsequent check.

It's a policy that's good for you and good for the credit bureaus. Your credit scores stay high, and TransUnion, Equifax and Experian collect more fees from the banks.


Read the full articular Dan Green

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David Brinkley

David Brinkley

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