Buying a home is a huge investment, and few people have cash on hand to make the purchase outright. Most homebuyers work with a bank or mortgage lender to borrow money to buy their home.

As a first-time homebuyer, you probably already know that your personal credit plays a large role in whether or not your mortgage application is approved. What you may not know is that simply submitting that application has an impact on your credit score.

But wait! Before you start worrying that your credit is about to take a nosedive, this is one of those good news/not-that-big-of-a-deal news scenarios.

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Yes, it’s true that your credit score may drop slightly while mortgage lenders are reviewing your home loan application. However, as long as you make all of your payments as agreed, a mortgage is one of the best ways to increase your credit score in the long term.

Here are answers to more frequently asked questions about how applying for a home loan affects your credit score.

What Is the Difference Between a Soft Credit Inquiry and a Hard Credit Inquiry?

It’s important to understand the distinction between hard and soft credit inquiries because only one type will affect your credit score. 

Soft Credit Inquiry

Soft inquiries are typically conducted by lenders assessing eligibility for prequalification offers, employers conducting background checks, and individuals checking their own credit reports.

Soft credit inquiries:

  • Do not affect your credit score
  • Do not require your permission
  • Only provide surface-level details, such as credit score, address confirmation, and flags with no details
  • Are not visible to creditors on the credit report

Hard Credit Inquiry

Hard credit inquiries are the type lenders run before offering a mortgage, car loan, student loan, or credit card. 

Hard credit inquiries:

  • Do have an impact on your credit score
  • Require your permission
  • Provide a deep dive into the details of your credit history

Why Does a Mortgage Application Change My Credit Score?

Any time you apply for a loan—mortgage or otherwise—the lender does a hard credit inquiry. This information is used to determine your willingness and ability to pay back debt. 

However, too many credit checks in a short period of time signal potential financial instability, which makes you look like a high risk and, consequently, lowers your credit score.

How Much Should I Expect My Score to Drop When I Apply for a Home Loan?

Applying for a home loan doesn’t cause a precipitous drop in your credit score. In fact, you will most likely only see a one- to two-point difference. 

It’s also important to remember that although the credit inquiry stays on your credit report for 24 months, it only affects your credit score for one year.

If I Apply for More Than One Home Loan, Will My Credit Score Drop Each Time?

Although applying for multiple loans of different types at one time is generally not a great idea, comparing interest rates and terms for multiple mortgage providers should not lower your credit score.

The algorithms used to calculate credit score recognize when someone is shopping around for a mortgage and adjust accordingly.

What Is a “Shopping Window” During the Home Loan Application Process?

To expand on the previous question, borrowers are granted a “shopping window” during which they can compare mortgage offerings from different lenders. Completing your mortgage shopping within this designated window decreases the impact of hard inquiries on your credit score by counting all checks as a single pull.

This shopping window varies by analytics provider. For example, the VantageScore window is 14 days, while FICO gives borrowers 14-45 days to shop around depending on which FICO scoring formula the lender chooses to use.

How Can I Minimize the Impact of a Mortgage Application on My Credit Score?

Applying for a mortgage doesn’t have a huge negative impact on your credit score, but there are a few ways to keep those numbers up.


Unlike a loan preapproval, prequalifying only requires a soft inquiry and doesn’t affect your credit score. However, if the sale proceeds, the lender will dig deeper into your credit with a hard inquiry, which may have an impact on your score.

Debt Reduction

To make your application as attractive as possible, pay down your existing debt before applying for a home loan. In addition to showing lenders you can afford a monthly mortgage payment, unused available credit looks better than almost-maxed-out lines of credit.


Financial stability shows mortgage lenders that you are willing and able to pay back a loan. Wait 3-6 months after applying for a credit card, car loan, or other financial contract and several months after starting a new job before submitting a mortgage application.

Take the Next Step in Your Homebuying Journey

Applying for a mortgage isn’t the credit score killer rumors suggest. In reality, your score may only temporarily drop by a point or two. Over time, a mortgage can increase your credit score far more than the loan application decreased it.

If you would like to learn more about applying for a home loan, the specialists at FFB Mortgage Lenders are always available to help.

 Contact us or apply now, and let’s get started today!

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