Home buyers are often advised to get quotes from multiple lenders before choosing a home loan that is right for them. Indeed, shopping around for a home loan is the easiest way to find a bargain. However, did you know that applying to several lenders at once can bring down your credit score, and can potentially derail your mortgage application, too?

Can shopping for a home loan affect my mortgage application

There is no doubt that in a highly competitive mortgage market, the only way to get the best possible deal is by putting the lenders fighting for your business against each other. This inspires home buyers to apply for a mortgage with multiple lenders so that they have several competing quotes to choose from. Besides, there is mental assurance that at least one of the applications would get approved. But experts warn that shopping around for credit is not considered good behaviour by the credit officers who review your financial history.

Are you wondering why?

Banks offer their best deals to customers with a high credit score and clean financial history. Thus, before approving your home loan application, lenders make a credit inquiry on your credit, also known as a hard pull. Too many inquiries negatively impact your credit score because it tells the lender you are desperately seeking credit, signalling financial issues. Unsurprisingly, too many credit inquiries in a short period bring down your credit score, which makes it even more challenging to get your mortgage approved or negotiate a lower rate.

Fortunately, the FICO model recognises that most mortgage hunters are simply looking for a better rate on their home loan. Thus, the FICO model allows you to shop for the same type of credit within a period of 45 days. This means multiple mortgage enquiries in that period do not affect your FICO score. The older FICO model allows a window of 14 days, within which multiple inquiries are treated as one. Thus, to be on the safer side, it could be a good idea to keep your shopping period under 14 days.

“In case you have messed up and have made too many home loan applications in a short time, the best way is to wait it out. Fortunately, shopping around does not impact your score very badly. If you stay quiet for three to four months, you would see your score beginning to improve gradually,” says John, a mortgage broker. “It goes without saying that you must maintain a good credit score by paying your bills on time and avoiding any defaults, as such black marks tend to stay longer on your credit file.”

John is right. We strongly recommend you pull out your credit report from websites such as Equifax and go through it minutely. In case you find any incorrect listings, dispute them immediately to have them off your file. When you start shopping for a mortgage, you should also avoid taking on any new debt.

Comparing home loan rates online

Comparing home loans online is a great way to score a deal on your home loan. Instead of calling up lenders or applying to several lenders, you can simply visit a mortgage comparison site such as HashChing to compare broker pre-negotiated rates from over 60 lenders across Australia (click here to compare).

Apart from having a look at the published rates from various lenders, you can get in touch with the verified brokers on the portal to discuss your requirements in detail. In case you have a low deposit or a low credit score or even bad debt on your books, a mortgage broker can get you in touch with specialist lenders who would be happy to lend to you in your special situation. Besides, your broker would do all the legwork for you, saving you time and money, at no cost no you.

You can pose your queries online to have them answered by experts, here. Don’t worry, your information is safe with us and you will not receive any unwanted calls or emails.


By Vidhu Bajaj,
HashChing Content Writer



HashChing is helping Australians by providing access to the pre-negotiated home loan deals. Obligation free consultation with one of our partner brokers might save you time, hassle and money.

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