Does mortgage pre-approval impact credit?

Pre-approval, which is valid for 90 days, gives a written commitment of your mortgage affordability. It’s quoted using verified information, uses documents detailing your financial situation, and utilizes a hard credit inquiry. Pre-qualification, on the other hand, estimates your affordability at one time, gives an early estimate of affordability, and is quoted using a self-attested estimate. It also uses answered questions on your financial situation and is a self-reported credit score.

Two ways to check your credit:

There are two ways to check your credit: a soft credit check and a hard credit check. Essentially, you are the only one who would see a soft credit check – it is not seen by other lenders, and it has no impact on your credit score. A hard credit check indicates that a lender is going to give you credit, showing up when other lenders conduct credit checks on you, and it can impact your credit score. Here is a deeper look at the differences between a soft credit check and a hard credit check:

Soft credit check. Lenders use soft credit checks when deciding if they should pre-approve you for a credit card. A lender may also use a soft credit check if your current lender pulls a credit report for an account review or when a debt collector reviews a recent credit report. Checking your own credit rating will also get logged as a soft credit check.

Hard credit check. Lenders use a hard credit check, on the other hand, when you apply for a loan, commonly a car loan or a mortgage, or a credit card. A hard credit check indicates that you want to take on added debt. It should be noted, as well, that other potential lenders will be able to see any hard credit checks and can therefore impact your credit score. However, any negative impacts will likely only happen if you take out numerous hard credit checks.

Is pre-approval a hard credit check?

Yes. Pre-approval is a hard credit check. Since it involves other parties looking at more detailed information, lenders taking out a hard credit check on you during pre-approval is a standard step in the mortgage approval process. Hard credit checks are therefore routine because lenders provide loans for significant amounts of money.