Routing # 256078446
MORTGAGE KNOWLEDGE CENTER
PenFed Mortgage with Confidence
MORTGAGE
Does Pre-Approval Affect Your Credit Score?
What you'll learn: What you need to know about how your credit score is used during pre-approval.
EXPECTED READ TIME: 4 MINUTES
January 15, 2025
Before you can go from homebuyer to homeowner, there are a number of steps involved in the homebuying process. As you start your journey, an early action you can take to set yourself up for success is getting pre-approved for a mortgage. Pre-approval can help you choose a mortgage that is right for you, and ultimately, the home you want. However, it is important to remember that getting your credit checked is an important part of the pre-approval process.
Here is what you need to know about how a mortgage pre-approval may affect your credit score before you submit your application.
What is pre-qualification versus pre-approval?
First, you will need to understand the difference between getting pre-qualified and pre-approved for a mortgage. Both work together, getting you that much closer to final approval. The real difference between these two terms comes down to how lenders check your financial readiness in each step. Here is how it breaks down:
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The first step when applying for your mortgage is pre-qualification. Here is what it involves:
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Your lender will perform a soft check on your credit score. You will also be asked for your income, but it will not be verified just yet.
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You are then able to inform the seller that your credit is good, and that if your income stands up to review, you will likely be qualified to purchase a home.
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You will also be provided with an approximate amount of how much you may be able to borrow.
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The next step is official pre-approval, which means:
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A lender verifies not only your credit, but also your income and assets.
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Involves completing a mortgage application and requires a hard credit history check.
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You will then be provided with a specific loan amount you can borrow from your lender and potential interest rate figures.
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Will pre-approval or pre-qualification hurt your credit score?
If you are concerned about whether a mortgage pre-qualification or pre-approval will affect your credit score, here is what you need to know. A mortgage pre-qualification requires a soft credit pull which will not affect your credit score; however, a mortgage pre-approval typically requires a hard credit pull, which does temporarily affect your credit score. However, that does not necessarily mean it is bad for your credit score.
Each time you apply for credit or a loan, your credit score is reviewed. Multiple hard inquiries may indicate to lenders that you have opened several lines of credit, which could be a red flag for high-risk financial behaviors. For example, if you were getting ready to buy a home, you would not want to buy a car or any other big-ticket items that would require you to open another line of credit.
Keep in mind that various pulls for a particular type of credit, such as a mortgage, tend to have less of an impact on your overall credit score, compared to a number of pulls from different sources.
Should you get pre-approved by multiple lenders?
As you begin researching mortgages and lenders, it is important to keep an open mind. There are many different types of mortgages to choose from, and even more lenders out there who want to help. You can and may want to consider taking the time to explore what different lenders have to offer. That way, you can find which option (and mortgage) works best for you.
That said, it may not be the best course of action to apply for pre-approval with every lender you are interested in. Remember that pre-approval requires a hard inquiry on your credit score, and those hard pulls will stay on your report for at least two years.
Instead, you can consider getting pre-qualified with multiple lenders on your list. That way, you can get a general idea of what lenders are willing to let you borrow for your home purchase without it affecting your credit score. This can help you narrow your lender options and feel confident in submitting your official mortgage application.
How long does it take to get pre-approval?
The time it takes to receive pre-approval will depend on the lender you choose and the complexity of your finances. In most cases, you can expect to be pre-approved within seven to ten days, and it is possible for it to happen in even less time.
If you want to speed up your pre-approval process, it can be helpful to have all of your financial documents organized and ready to send to your lender if they request them.
When should you get pre-approved for a mortgage?
Fortunately, a pre-approval often lasts for about 60-90 days which can give you enough time to shop around for the lowest rates and think through your homebuying decisions. As getting pre-qualified and pre-approved provides you with a price point, these steps can also help you save time by narrowing your scope of search to homes that are in your price range.
If you know you are ready to become a homeowner, taking this key step can help you gauge your budget and show a seller that you are a serious buyer.
SIMILAR ARTICLES
Creating Your Homebuying Budget
How much should you budget when buying a home? PenFed Credit Union offers a list of all the expenses and costs you may encounter as you complete closing on your home.
Can I Afford to Buy a Home?
It is important to understand if you can afford to buy a home with your current income and expenses. PenFed has listed some tips for you to prepare to buy a home.
10 Things New Homebuyers Need to Know
There are a lot of things new homebuyers need to know. Here are 10 things to consider when buying a home.
What is a Loan Estimate?
A few days after applying for a mortgage, you will receive a Loan Estimate. Learn what to expect from this document and how to read it.
Home Buying Steps
Mortgage Products
Disclosures
1Conventional Loans
Except for holidays, rates are updated Monday through Friday at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on 1.0 discount point, which equals 1.0 percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, conforming, fixed-rate loan. Loan amount of $400,000; loan-to-value ratio of 75%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.
Rates quoted require a loan origination fee of 1%; not to exceed $1,995. Speak to a PenFed Mortgage Loan Officer for additional details.
2FHA Loans
Except for holidays, rates are updated Monday through Friday at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on 1.0 discount point, which equals 1.0 percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, conforming, fixed-rate loan. Loan amount of $400,000; loan-to-value ratio of 96.5%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.
Rates quoted require a loan origination fee of 1%; not to exceed $1,995. Speak to a PenFed Mortgage Loan Officer for additional details.
3VA Loans
Except for holidays, rates are updated Monday through Friday at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on 1.125 discount point, which equals 1.125 percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, conforming, fixed-rate loan. Loan amount of $450,000; loan-to-value ratio of 95%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.
Rates quoted require a loan origination fee of $995.
4Jumbo Loans
Except for holidays, rates are updated Monday through Friday at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on 1.25 discount point, which equals 1.25 percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, non-conforming, fixed-rate loan. Loan amount of $1,009,000; loan-to-value ratio of 70%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.
Rates quoted require a loan origination fee of 1%; not to exceed $1,995. Speak to a PenFed Mortgage Loan Officer for additional details.
Fixed Rate Advance Lock-In You may lock in an Annual Percentage Rate for Advances during the Advance Period. During your Advance Period, you may choose to have three separate Fixed Rate Advances locked in at any one time, with a maximum of two new Fixed Rate Advances per calendar year. Each Fixed Rate Advance must equal or exceed Ten Thousand Dollars ($10,000.00) and you may not request a Fixed Rate Advance that would cause the amount you owe to exceed your Credit Limit. The only term option for your Fixed Rate Advance is 240 months (“Fixed Rate Advance Term”). However, the term of your Fixed Rate Advance cannot exceed your Repayment Period.
Routing #256078446
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