If you’re thinking about buying a home, one of the first questions you might have is: “What credit score do I need?” Right after that, you might wonder: “Will shopping around for a mortgage hurt my credit score?” Let’s break both down clearly so you can house hunt with confidence.
What Credit Score Is Needed for a Mortgage?
The short answer: it depends on the type of loan you’re applying for. Here’s a quick breakdown:
- Conventional Loans (the most common type) typically require a minimum credit score of 620. However, a higher score—think 740 and up—can help you secure better interest rates.
- FHA Loans (a great option for first-time buyers) allow for credit scores as low as 580 with a 3.5% down payment. In some cases, lenders might approve applicants with scores between 500 and 579, but a larger down payment is usually required.
- VA Loans (for eligible veterans and service members) don’t technically have a minimum credit score requirement, but many lenders prefer scores of 620 or higher.
- USDA Loans (for rural homebuyers) often look for scores of 640 or higher to streamline the approval process.
Does a Lender Pulling My Credit Hurt My Score?
Here’s the good news: for most people, the impact is very small—if anything at all.
When a lender pulls your credit report during the pre-approval or application process, it’s called a hard inquiry. A hard inquiry might cause your score to drop a few points, usually less than five. And even that small dip is temporary, typically bouncing back within a few months.
Even better: when you’re shopping for a mortgage, multiple credit pulls within a short window (usually 14-45 days, depending on the scoring model) are treated as one inquiry. This means you can compare lenders without being penalized multiple times.
Why Does Your Credit Get Pulled? Lenders need to check your credit to verify your financial history, your level of debt, and your ability to repay the loan. It’s a crucial step in making sure you’re matched with a mortgage that’s right for you.
Bottom Line
Don’t let fear of a tiny dip in your credit score stop you from getting pre-approved and shopping for the best mortgage. And remember: you don’t need a perfect score to buy a home—just a smart plan and the right guidance.
If you’re wondering whether you’re ready to take the first step, I’m happy to connect you with trusted mortgage professionals who can answer your questions and walk you through the process!