We are in the process of building a new home, and we currently own a home. Our credit scores are currently excellent. We have already applied for one mortgage loan, and then after applying, I found some things out that I didn't like about the bank's mortgage loan program.
We are now in the process of applying for a mortgage loan with a different bank. When it comes time to close, we will obviously only close with one of the two banks.
I also have to open a HELOC, which I haven't applied for yet. This will allow us to put 20% down on the new house, if we don't sell our current house in time.
Any ideas on how our credit scores will be effected from all of these actions (2 mortgage loan applications and a HELOC)? I am just concerned that our credit rating could drop below excellent due to all the applications.
Thanks for any help!
Good question, and you'll almost certainly be OK with only a small, temporary change in your credit scores. First and foremost, credit bureaus view multiple mortgage related credit inquiries within a 30 day period as one inquiry, as opposed to multiple credit card inquiries. Many folks applying for mortgages do have multiple lenders pull their credit, and lenders also may have to repull credit during the loan process. Because the HELOC application is also mortgage related, it's likely that all three inquiries will be viewed as one to the credit scoring models. Even if they weren't, however, any impact to your scores would be minor and fleeting, perhaps 5 points or so. If anything, you may want to apply for the heloc sooner rather than later so it will be more likely within the 30 day window, but you should be fine regardless.