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How to get a mortgage without damaging your credit


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Yours credit score is one of the most important indicators of your financial health, so lenders use it to determine your creditworthiness every time you apply for a loan. It is inevitable that yours credit score will fluctuate over time as you take on debt, apply for and pay off more debt, and sometimes it takes a while to recover from bigger drops.

If you think you will applying for a mortgage In the near future, you may want to take some extra steps to ensure your credit score doesn’t take too much of a hit throughout the home buying process.

Note that you should avoid applying for other new lines of credit at the same time as you shop for a mortgage. Opening too many new lines of credit at once can lead to a decrease in your credit score — and when you apply for a mortgage, you will want it to be as high as possible since your credit score is what will determine the interest rate you’ll lock in for 15 years or more.

Paying off existing debt can also help improve your credit score before you start approaching lenders. Depending on what your current credit score is, an increase of even a few points could potentially be good enough to push you into a better credit score range, which could get you better mortgage terms.

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Double check your credit score

When you’re about to start your mortgage search, keep in mind that applying with a credit score that’s in a healthy range increase your chances of approval. Although there may be some lenders that cater to those with a lower credit rating eg Rocket mortgagekeep in mind that this three-digit number can not only make you qualify for a mortgage, but also affect the interest rate you end up paying — and the higher your credit score therefore, the lower your interest rate will be.

Rocket mortgage

  • Annual Percentage Rate (APR)

    Apply online for personalized rates

  • Types of loans

    Conventional Loans, FHA Loans, VA Loans and Jumbo Loans

  • Conditions

    8 – 29 years, including 15-year and 30-year terms

  • Need a loan

    A credit score of 620 is normally required, but applicants with a credit score of 580 will be considered if other eligibility criteria are met

  • Minimum down payment

    3.5% if you get an FHA loan

It’s also important to make sure the lenders you’re interested in will accept your credit score, as most lenders generally require a score of at least 620. giant loanscredit score requirements may be even higher.

Knowing your current credit score can help you avoid applying for a loan with higher credit score requirements, which will only result in rejection. Of course, to improve your chances of getting approved by the lenders you want — and to improve your chances of locking in a lower interest rate — you can always delay the home buying process and work on improving your credit score first.

You will want too monitor your credit report so you can spot any mistakes that could cause you to report negative information to lenders about your applications.

Get pre-qualified for a home loan

Obtaining pre-qualification for a mortgage means you get an estimate of how much money you could borrow to buy a home. A lender will usually run a soft inquiry on your credit report and this will not affect your credit score.

While a pre-qualification is a less rigorous analysis than a pre-approval, it can still provide a rough estimate of your loan amount so you can at least tell which homes will be most affordable for your budget. Since your credit score won’t be affected by prequalification, you should really try to get prequalified by as many lenders as possible to see how much each is likely to offer you.

Of course, you still need to be strategic about which lenders you seek pre-qualification from. For example, if you are already planning to make a big one down paymentit would be wise to consider those that charge a lower lender’s fee or no lender’s fee at all, e.g. Union Bank. These extra fees can add up quickly and will need to be added to the money you’ll pay down payment on the home, so saving when you can is a smart move.

Keep in mind that you will eventually need to get pre-approved for a home loan. While a pre-qualification is an early step you can take earlier in the home buying process, it still cannot replace a pre-approval.

Union Bank

  • Annual Percentage Rate (APR)

    Apply online for personal rates; fixed and adjustable rate mortgages included

  • Types of loans

    Conventional Loans, HomeReady Loans and Jumbo Loans

  • Conditions

  • Need a loan

  • Minimum down payment

    3% when you get a HomeReady loan


  • The Ally HomeReady Loan allows for a slightly lower down payment of 3%
  • Pre-approval in just three minutes
  • Apply in just 15 minutes
  • Online support is available
  • Existing Ally customers may receive a discount that applies to closing costs
  • Does not charge the lender


  • Does not offer FHA, USDA, VA or HELOC loans
  • Mortgages not available in Hawaii, Nevada, New Hampshire and New York

Apply within 45 days

Typically, whenever you apply for a new line of credit, the lender will run a a difficult investigation and your credit score may be temporarily lowered. Because of this, applying for too many new loans can hurt your credit score as you will be seen as a riskier borrower.

When it comes to mortgages, however, lenders expect you to shop around, and you can do so as much as you need within 45 days of receiving your first serious inquiry without further damaging your credit score.

This is where it can be helpful to take advantage of the knowledge gained from pre-qualification and know which lenders are most likely to suit your financial needs. That way, you won’t have to waste valuable time during the 45-day window on additional searches for new lenders.

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Editorial Note: The opinions, analyses, reviews or recommendations expressed in this article are solely those of Select and have not been reviewed, approved or otherwise endorsed by any third party.

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