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Does Mortgage Preapproval Impact Your Credit Score?

How Preapproval Works?
How Preapproval Works?

Mortgage preapproval can slightly impact your credit score due to a hard inquiry, but the effect is temporary. The benefits, such as showing sellers you’re a serious buyer and setting a realistic home budget, outweigh the small dip.

How Preapproval Works:

  • Submit financial documents like bank statements, tax returns, and pay stubs.

  • Receive a preapproval letter stating how much you can borrow.

Preapproval vs. Prequalification: Preapproval is more reliable because lenders verify your financials, unlike prequalification, which is based on self-reported info.

Multiple Lender Inquiries: If done within a short period, multiple inquiries are counted as one, minimizing the score impact.

Bottom Line: Though your credit score may temporarily dip, getting preapproved is a key step in buying a home.

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