Mortgage Broker Santa Monica | Does Mortgage Preapproval Affect Your Credit Score?
What are your credentials?
Mortgage Broker Santa Monica – I am the Founder of Mortgage Broker Santa Monica, a licensed mortgage broker, and real estate agent. We are a specialist in helping buyers and sellers with homes for sale in Westside, Los Angeles, California, and specifically homes for sale in Santa Monica, CA, and houses for sale in Beverly Hills, CA.
What is a mortgage preapproval and how does it work?
Mortgage pre-approval is a process by which the applicant submits an application and supporting documentation so that the mortgage broker or lender can see what the applicant will get pre-approved for. The supporting documents include:
- Copy of full two years of tax returns
- Copy of 1 month of previous earning statement/paystub
- Copy of all bank statements
- Copy of your driver’s license and social security card
- If you are applying for a VA loan, a copy of your DD-214 or Certificate of Eligibility
Once the mortgage broker or lender receives your application and documents they will be able to look at your DTI (Debt to Income Ratio), credit score, down payment, and reserves to see what you can be pre-approved for.
How does mortgage preapproval impact a person’s credit score?
A mortgage pre-approval has no impact on a person’s credit score but in order for one to get pre-approved the mortgage broker or lender will need to pull their credit report. That pull will decrease the applicant’s credit score temporarily between 2-8 points. FICO states 5 or fewer points. It’s important to note that this is only temporary and should not affect the borrower’s credit rating significantly in the long term.
What steps can borrowers take to prepare their credit before they apply for mortgage preapproval?
1) Have a tri-merge credit report pulled vs. using credit karma or similar websites
2) Address any derogatory accounts by working with your mortgage broker and a credit specialist
If possible:
3) For a quick credit score boost have a family or friend add you as a co-authorized user to their credit card for at least a billing cycle. Note it’s important that this credit card be seasoned
4) If you have the option to pay down accounts without depleting your down payment this will improve your credit score
To get answers to other frequently asked questions visit our website and blog section: Mortgage Broker Santa Monica and Mortgage Broker Santa Monica Blog