Consumers can be confused regarding multiple credit inquiries and how they affect their credit scores. After a little online research, they can read up on what improves and harms credit scores, and multiple credit inquiries are one of the bad ones. But that’s not necessarily the case as it relates to home loans.
Let’s say someone has applied for a mortgage. But after two weeks the applicant hasn’t heard from the loan officer. No correspondence, no return phone calls, just a lot of unanswered voice mails. Thinking that applying for a mortgage with another company would trigger another hard inquiry, the applicant just sits tight and prays the loan will go through and close on time. However, that doesn’t have to be the case.
The Consumer Financial Protection Bureau, or CFPB, has established guidelines as it relates to credit inquiries. With a mortgage, a consumer can, in fact, apply with a new lender and have a new credit report pulled with no effect on scores whatsoever. How? The rules state that as long as the inquiry is made for the same purpose (buying a home or refinancing a mortgage) and made within a 45 day period, the additional inquiry is benign. There is only an issue if an application was made, the loan not closed, and applying again four or five months later. But if a new request for a mortgage is made within that 45-day window, no harm and no foul.