NO, If you don’t actually go through with applying for the loan after you’ve inquired about pre-approved offers, it won’t have any impact on your credit score. Pre-approvals are referred to as “soft enquiries”. A pre-approval from a lender/bank indicates that the lender/bank has determined, based on the information in your credit report, that you are a good candidate for receiving credit/loan from that lender; nevertheless, a pre-approval does not guarantee that you will actually be granted the credit. The lending institution requires further details, like your yearly income, for example.
What is a hard enquiry?
When someone applies for a credit card or loan, such as a home or an auto loan, a hard inquiry is the type of inquiry that is made on their credit report. It is an indication that the person is considering taking on greater debt and has taken positive measures toward doing so.
What is a soft enquiry?
When determining whether or not to grant a consumer pre-approval for a credit card, a lender may conduct what is known as a “soft inquiry.” When a consumer’s current lender pulls a credit report for an account review, this is another example of a soft inquiry. Another example of a soft inquiry is when a debt collector checks a credit report for recent activity.
Why Get a Pre-Approval?
Even though a pre-approval does not provide a 100% assurance that you will be granted a home loan, it is an excellent first step to take. It will make you appear more appealing to sellers as a potential buyer. When someone is selling a house, they want to deal with buyers who will make the process as easy and stress-free as it can possibly be. It is easier to get someone to commit to the process of buying a home if they already have a mortgage lender on their side and have spent the time getting pre-approved for a loan.
Do Multiple Loan Pre-Approvals Affect Your Credit Score?
If you have more than one soft inquiry on your credit report, then the answer is no, it will not hurt your credit score. When you apply to get preapproved by a lender, some of them will do what is called “hard” credit inquiries. In that case, it will hurt your credit score, so ask the consultant how they will be running their checks.
References
Investopedia: Do Pre-Approved Credit Card Offers Affect My Credit Score? (2021, May 4). www.investopedia.com. Retrieved October 18, 2022, from https://www.investopedia.com/ask/answers/102814/do-inquiries-preapproved-offers-affect-my-credit-score.asp
Trasatt. (2022, May 18). Assurance Financial: Does Pre-Approval Affect Your Credit? | Assurance Financial. assurancemortgage.com. Retrieved October 18, 2022, from https://assurancemortgage.com/does-pre-approval-affect-credit-score/
Mortgage Rates, Mortgage News and Strategy : The Mortgage Reports: How many times can you get preapproved for a home loan? (2022, February 22). themortgagereports.com. Retrieved October 18, 2022, from https://themortgagereports.com/89056/multiple-preapprovals-home-buyer
