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St. Louis Homebuyers: Will a Pre-Approval Hurt Your Credit?

Jan 5, 2023 | Industry News

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For any first-time homebuyer, the process of purchasing a home can be a daunting one. One very important step in the process is getting pre-approved for a mortgage loan. But many potential buyers are concerned about how their credit score may be impacted by this step. Let’s take a closer look at what getting pre-approved means, and how it affects your credit score in St. Louis.


What Does It Mean to Get Pre-Approved?

When you obtain pre-approval for a mortgage loan, you are essentially entering into an agreement between yourself and the lender that they will offer you a loan up to a certain amount depending on your current financial situation. This step helps lenders determine how much money they can lend you, based on factors such as your income, assets, debt, and credit history.


Does Getting Pre-Approved Impact Your Credit Score?

The short answer is yes – getting pre-approved can affect your credit score; however, it only does so temporarily. This is because when you apply for pre-approval, lenders will usually perform what's known as a hard inquiry into your credit report. A hard inquiry is when someone accesses your credit report with the intention of making a lending decision about you (in this case, whether or not to extend you a pre-approval). While this does impact your credit score negatively in the short term (usually no more than five points), it should not have too much of an impact over the long term if you maintain good credit habits going forward. Additionally, multiple inquiries in relation to obtaining mortgage pre-approval within a certain period of time (usually 45 days) count as just one inquiry on your credit report. 


How Can You Protect Your Credit Score?

The best way to protect your credit score while obtaining pre-approval is to shop around carefully. You don't want to apply for pre-approval from multiple lenders since this will result in multiple inquiries being made on your credit report all at once, and this could have serious negative consequences for your score over time. Instead, research different lenders thoroughly before choosing one, and make sure that their terms are favorable for both parties involved before applying for pre-approval with them.


For anyone considering buying a home in St. Louis, getting pre-approved is an important step in the process; but it shouldn't come at the expense of damaging your credit score unnecessarily. The key is having realistic expectations about how much money you can borrow and shopping around carefully before choosing just one lender who offers favorable terms that work both ways. That way, any potential dips in your credit score due to hard inquiries will be kept to a minimum, while still helping you move forward to purchasing the home of your dreams.

If you want to get pre-approved for a mortgage, please reach out to us. We’d be happy to help.

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