Getting pre-approved can make it easier to shop for homes, but many buyers wonder, “Will getting pre-approved hurt my credit score?”
Can you protect your credit score and still reap the advantages of shopping with a pre-approval letter?
Here’s what you should know about getting pre-approved and how it can impact your credit score.
What is Pre-Approval?
When you request to be pre-approved by your lender, they will review your financial history. This process includes running a credit check.
As you may know, credit checks have the ability to lower your credit score.
When you are shopping for a home, the higher your credit score, the better. In that case, is pre-approval really worth it? Many experts say it is.
Will Pre-Approval Lower My Credit Score?
The pre-approval process may lower your credit score by one or two points. If you have a high score, this is nothing to be concerned about. The advantages of requesting pre-approval far outweigh the risks.
Even getting multiple lenders to approve you at once won’t significantly lower your credit score. If you’ve paid off your debt and used credit responsibly, your score should be high enough to help the pre-approval process run smoothly.
If a few points will make or break you, you probably aren’t ready to start the home-buying process.
Why Should I Get Pre-Approved?
Since being pre-approved won’t significantly lower your credit score, many experts say it’s worth the extra time and effort to secure a letter of pre-approval from a lender. Your letter of pre-approval is your golden ticket into the world of home-buying.
Once you’re pre-approved, you can show your letter to sellers to let them know you’re serious about buying and not just window shopping. This also lets them know that you have the finances to secure a mortgage if they decide to sell their home to you.
When you are pre-approved you know the budget you have to work with. You will be able to narrow your search to homes in your price range. This will help you save time.
Once you find a home you love, you’ll be able to close and move in quickly since your lender already has your information on file from the pre-approval.
Being pre-approved is a win-win for everyone involved, and you can shop confidently once you have your letter in hand.