Alright, so you’re getting serious about buying a house and wondering if a credit check is going to mess with your score. The answer? It depends on where you’re getting your pre approval. There are two types of credit checks: soft checks and hard checks. And yes, one of them can give your score a little nudge down—but don’t freak out just yet.
Hard vs. soft credit checks
If a lender runs a hard credit check, then yeah, your score might take a small hit.
Now, if you’re smart and go with a lender that does a soft credit check (like Tomo Mortgage) for a pre approval, then guess what? No hit to your credit score at all. This is a big win because it means you can get pre approved without sweating over multiple hits to your credit if you don’t snag a house within the 90-day window (that’s usually how long pre-approvals last before you need a new one). Plus, you can get your pre approval done sooner, which means you’ll have a better grip on your budget before you’re ready to throw down an offer.
Once you’re further down the line and have made an offer and you’re ready to close, every lender will need to do a hard credit check (including Tomo Mortgage). But before you start stressing, know that this dip is usually temporary. It’s like a minor bruise on your credit score’s ego—it’ll bounce back.
What happens during a credit check?
A soft-credit check is basically a little peek behind the curtain. You’ve probably done soft credit checks on yourself (if you haven’t, you should), where your mobile banking or credit card app tells whether your credit score is up or down on any given day. You might get soft credit checks from employers or credit card applications, too (they’re pretty common). Also called a “soft inquiry” or a “soft pull,” soft credit checks don’t impact your credit score because they don’t really signal to a credit bureau that you’re applying for a loan—merely that you’re shopping around.
When you get a hard credit check, here’s what’s really happening. The lender’s going to pull your credit report from the big three—Equifax, Experian, and TransUnion. Each one of these credit bureaus has its own report on you, so the lender will be checking all three to get the full scoop on your credit history. They’ll be looking at your payment history, how much of your credit you’re using, and any debts you’ve got hanging around. This credit check is their way of figuring out if lending you money is a smart move or a risky bet. Plus, it’s going to impact the interest rate they offer you. So, if you’ve been keeping your credit reports squeaky clean, this part of the process will be a breeze.
Bonus: credit check vs. credit pull—what’s the difference?
Spoiler alert: there’s no difference. A credit check and a credit pull are just two ways of saying the same thing. Both mean someone’s taking a look at your credit report from the bureaus.
Keep that score high
Here’s the silver lining—even if your credit score takes a small dip from a hard check, you’ve got the power to boost it back up. Making your mortgage payments on time isn’t just good for your bank account; it’s also going to help your score rebound and get even better over time. Payment history is a big deal for your credit score, and showing the world that you can handle your finances is going to pay off. Plus, having a mortgage adds some diversity to your credit mix, which can give your score a little extra love. So, while that initial dip might sting a bit, solid payment habits will set you up for a stronger credit score in the long run.
What’s the bottom line?
Here’s the deal—credit checks are just part of the home-buying game, and yeah, they might affect your score a bit. Monitoring your credit regularly is a smart move, so you can catch any errors or issues before the lenders do. You can get a free credit report once a year from each of the three major bureaus through AnnualCreditReport.com. So, go ahead and take advantage of that to stay on top of your financial health.
Curious to learn more about what credit score you need to buy a home? Check out our guide for all the deets.
If you’re ready to start your journey to homeownership, get pre approved with Tomo Mortgage today.