Running your credit will hurt you. Ever hear that?

As a lender, it’s a common occurrence that I’ll hear a consumer say this to me. Many consumers have heard this line before, and it's not surprising given the wealth of information circulating online and in advertisements that can leave people feeling apprehensive about letting lenders check their credit.

But here's the good news: When a lender conducts a credit inquiry, it typically affects someone's credit scores by a modest margin, usually within the range of 2 to 8 points. The reason lenders need to pull their own credit report is that the scoring algorithms they use differ from those employed by consumer-oriented tools like Credit Karma or credit score reports provided by credit card companies. As a result, the credit scores seen by lenders may vary – either slightly higher or lower – compared to what consumers usually see.

Here's another piece of important information: You have a window of time to shop around for lenders, during which multiple inquiries are treated as a single inquiry, lasting usually up to 45 days. Many individuals commonly engage with several lenders as they search for the one that best aligns with their needs and preferences. So, if you're unsure about which lender to go with for your mortgage, consider contacting a few of them on the same day to minimize any potential impact on your credit.

Running your credit also serves another valuable purpose – it helps you proactively address any potential issues. Imagine relying solely on Credit Karma for credit monitoring, which provides information from TransUnion and Equifax, but not Experian. This could lead you to believe everything is in order while an issue on your Experian credit report goes unnoticed.

To put your concerns at ease, let me share a little-known secret from the lending industry. Lenders might advise you to avoid excessive credit inquiries, and this is partly to discourage taking on additional debt before purchasing a home. However, it's worth noting that the notion of credit inquiries being extremely harmful has been perpetuated by some lenders who fear losing business. The truth is, the impact is not as dire as it may seem.

If you're interested in delving deeper, I invite you to explore my YouTube channel, where I've created informative videos aimed at empowering individuals to become well-informed homebuyers. My mission is to provide valuable content that educates and empowers people in their purchasing journey. Click Here