Q: Is it true that shopping for different offers mortgage will lower my credit score
a: Many people believe that shopping for mortgage loans, home loans or auto loans may have a negative impact on their credit score because it requires the authorization of multiple lenders to pull your credit file. It is not necessarily the case according to the Fair Isaac Corporation, the makers of the FICO credit score that most financial institutions use to make lending decisions.
The FICO score is specially calibrated to take into account the fact that most people will shop around for the best deal when they get a loan for a major purchase. Here is how Fair Isaac explains the impact of the "rate shopping" on your FICO score:
Looking for a mortgage or an auto loan may cause multiple lenders to request your credit report, even if you are only looking for a loan. To compensate for this, the score ignores all mortgage and auto applications made within 30 days before scoring. So if you find a loan within 30 days, the applications will not affect your score while you do your rate shopping. In addition, the score appears on your credit report for auto or mortgage inquiries over 30 days. If it finds some, it has all the applications that fall in a typical shopping period as a simple investigation to determine your score. For FICO scores calculated from older versions of the scoring formula, this shopping period is the duration of 14 days. For FICO scores calculated from the latest versions of the scoring formula, this shopping period is the 45 days. Each lender chooses the version of the FICO scoring formula she wants the credit reporting agency to use to calculate your FICO score.
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