NERVOUS ABOUT A CREDIT SCORE DROP WITH CREDIT INQUIRIES – DON’T BE!

In the complex world of home financing, a common concern among our clients involves the impact of credit inquiries on their credit scores. Often, the thought of a mortgage credit check can make potential borrowers hesitant and fear it might lower their overall credit scores.

We’ve all heard it before…

“Can’t you just use my free Borrowell report?”

“I don’t want anyone to pull my credit, it will hurt my score!” Oh sure, sometimes our prospective clients just want a judgment call on their borrowing power and in most cases, I am comfortable assessing files without having to pull their official credit history. I’ve taken several client files pretty far without going through a hard inquiry.

However, without a complete history and proper credit report, my advice and opinions on their borrowing power will be filled with disclaimers, just in case there are any outstanding balances, loans, or late payments my client has either forgotten or has not yet disclosed to me. And, of course, sometimes there are outright errors in the credit report.

Understanding credit inquiries in mortgage applications

As mortgage professionals, it’s our duty to clarify and reassure clients about the realities of credit inquiries and the minimal impact they typically have.

Let’s dive into why borrowers shouldn’t worry excessively about their mortgage credit inquiry. To be clear, if someone wants a formal mortgage pre-approval or even a rate hold, then yes, absolutely, we have to pull a credit report.

Here’s the reality:

• Minimal impact: A single credit inquiry usually has a very small effect on your credit score, potentially lowering it by just 5 to 8 points.

• Credit score buffer: Most diligent credit users have a score buffer that more than compensates for the minor deductions caused by inquiries.
  

• Purpose of building credit: Remember, a big reason for maintaining a good credit history is to utilize it when making significant decisions like buying or refinancing a home.

In essence, avoiding a credit check could hinder your ability to get pre-approved for a mortgage. It’s crucial to let your mortgage professional proceed with the necessary checks to ensure you’re on the right track to securing your home loan.

Rocky’s Mortgages is here to help you navigate the debt consolidation process, find the best solutions, and guide you toward a debt-free future.  Contact us today to take the first step toward achieving financial freedom. Call (416) 456 8318 or (705) 994 3300. Email: michael.rothfeld@adamasfinancial.ca.