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Every day, we talk with borrowers who are shopping their mortgage around and who say, “I don’t want my credit report pulled again, it will drop my credit score.” That’s actually not the case.

The rules for credit reporting agencies state that if the same type of entity (such as multiple mortgage companies) are pulling the credit report, it will not be affected. Within the same business category, the first company pulling the credit will have the same score as the 10th company.

This government regulation is to allow consumers to shop their mortgage around to multiple companies without having their credit score drop.  However, it will drop if they have multiple pulls from different types of businesses, such as a mortgage loan pull combined with another type of loan pull, like a car loan or credit card in the same month.

To protect your credit score, here are a few vital recommendations. First, a score will drop if credit card balances are maxed out, so keep your credit card balances at 25% of the limit. Never let the balance go above 25%– in other words, don’t charge it up past 25% and then pay it down to the 25% amount; just never let the credit card balance get above 25%.

Paying down credit card balances are the easiest way to improve a credit score. Never be late on your payments; any payment on a loan or credit card that’s 30 days late will sink your credit score. And that makes a big difference in the mortgage rate you’ll be able to get on a new mortgage or a refinance.

If we can help in your mortgage process, contact Indigo Mortgage Colorado.

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