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How Many Times Do Mortgage Companies Check Credit?

by Don Rafner

When borrowers apply for a mortgage loan, their mortgage lenders run their credit, at least once. Whether these lenders check their borrowers' credit more than once during the lending process is a matter of personal preference. There are no firm rules in place forcing lenders to run a credit check more than once. Even if lenders check your credit multiple times, it will have little negative impact on a borrower's credit scores.

Mortgage Loans and Credit

When borrowers apply for a mortgage loan, their mortgage lenders request a credit report to learn the three-digit credit score that reveals how well they've managed their credit. Borrowers with a history of late payments on their car loan or a hefty credit card debt have lower scores. In general, scores of 740 or higher on the FICO scale get you the lowest interest rates.

How Many Times?

Mortgage lenders typically run a potential borrower's credit report early in the loan application process, often before they submit the Uniform Residential Loan Application that officially starts the process. Many lenders run credit only once during the entire process because a credit report is usually good for 90 days, long enough to cover the entirety of most mortgage transactions. However, some lenders run more than one credit check, usually about a week before a loan is scheduled to close or immediately after closing and before funding. These late-stage checks can reveal any significant new debt acquired during the mortgage application process. Some lenders also run a second verification of their borrowers' employment status to make sure that borrowers have not lost or change jobs during the mortgage process.

Little Impact

Hopeful homeowners often worry that the credit checks run by lenders -- especially if these borrowers are shopping with a large number of banks or mortgage companies -- will cause their credit score to drop. Even if a lender runs more than one credit check, it does little damage: An unlimited number of lenders can run your credit during a single two-week period -- you'll suffer just one hit to your scores, generally knocking only five points off your score. So even if your lender runs one report after you apply for your mortgage loan and another 40 days later when you're ready to close, the combined hit to your credit score will be somewhere around five points, depending on your prior score.

Be Careful

It does make sense, though, for borrowers not to take on new debt while applying for a mortgage loan. Mortgage lenders want your total monthly debts, including your estimated new mortgage payment, to equal no more than 36 percent of your gross monthly income. If you finance a new car while applying for a loan or make a large purchase on credit, the monthly car payments might throw this debt-to-income ratio out of whack, and may even cause your lender to rescind its offer.

About the Author

Don Rafner has been writing professionally since 1992, with work published in "The Washington Post," "Chicago Tribune," "Phoenix Magazine" and several trade magazines. He is also the managing editor of "Midwest Real Estate News." He specializes in writing about mortgage lending, personal finance, business and real-estate topics. He holds a Bachelor of Arts in journalism from the University of Illinois.

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