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How to Shop for the Best Mortgage Rates Without Affecting Your Credit Score

When it comes to securing a mortgage, finding the best interest rates and terms is crucial. Rate shopping, the process of comparing loan offers from multiple lenders, can save you significant money over the life of your loan. However, if not done carefully, it can also impact your credit score. In this article, we’ll guide you through the process of rate shopping while protecting your credit score. For personalized mortgage services, call O1ne Mortgage at 213-732-3074.

What Is Rate Shopping?

Rate shopping involves reviewing loan offers from various lenders to compare interest rates and fees. This due diligence can result in substantial savings, as even small differences in rates can add up over time. While it might seem like all lenders offer similar loans, the reality is that terms can vary significantly. By comparing offers, you can ensure you’re getting the best deal possible.

Does Rate Shopping Affect Your Credit Score?

When you apply for a loan, lenders perform a credit check, which is logged as a hard inquiry on your credit report. These inquiries can slightly lower your credit score. Although the impact is usually small and temporary, multiple hard inquiries within a short period can have a cumulative effect, leading to larger score drops.

How to Protect Your Credit While Rate Shopping

Credit scoring systems like FICO® Score and VantageScore® have built-in accommodations for rate shopping on installment loans such as mortgages, car loans, and student loans. They treat multiple inquiries within a specific time window as a single event, minimizing the impact on your credit score.

For FICO® Score, this window ranges from 14 to 45 days, depending on the version used. To be safe, stick to a two-week period. VantageScore uses a rolling two-week window, treating successive applications within two weeks as a single inquiry.

Consider Prequalifying for Credit Cards

Unlike installment loans, credit card applications do not receive the same combining treatment for inquiries. However, you can still rate shop by prequalifying for credit cards. Prequalification provides an estimate of the borrowing limit and interest rate without resulting in a hard inquiry, thus not affecting your credit score.

Many credit card issuers offer prequalification tools on their websites, and services like Experian’s card comparison feature can prequalify you for multiple offers at once. This allows you to gather rates and terms without impacting your credit score.

The Bottom Line

Shopping for the best interest rates and terms from multiple lenders can help you secure the most competitive credit offers. Understanding the potential impact on your credit score and using prequalification tools can help you navigate this process effectively. For expert mortgage services and personalized advice, contact O1ne Mortgage at 213-732-3074. Our team is here to help you find the best loan terms and make your home-buying journey as smooth as possible.

Ready to get started? Call O1ne Mortgage at 213-732-3074 today!

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