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Changes in Credit Scores During Mortgage Process
What If My Credit Scores Dropped During Mortgage Process?
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The credit score that was pulled when you applied for a mortgage loan is the credit scores that will be used throughout the mortgage process. If your credit scores dropped during the mortgage process, it does not matter because the credit score that was pulled is good for 120 days. If your credit scores drop during the mortgage process, it can potentially affect your loan approval, interest rates, and terms if the credit score drop was due to late payments, or other derogatory credit tradelines. Here’s what may happen:
- Re-Evaluation: The lender may re-evaluate your application and pricing if your credit scores went up. Higher credit scores mean lower rates.
- Rate Change: A lower credit score could lead to a higher interest rate if the credit report is 120 days or older and a new credit report needs to be pulled and your credit scores dropped.
- Approval Risks: If the score drops significantly after 120 days when a lender needs to pull a new tri-merger credit report, you may no longer meet the lender’s criteria.
What to Do:
- Communicate with Your Lender: Explain any factors causing the drop.
- Avoid Major Financial Changes: Don’t open new credit or make large purchases.
- Monitor Your Credit: Ensure there are no errors causing the score drop.
Staying proactive and working closely with your lender can help mitigate potential issues. Do not worry about your credit scores dropping because the original credit score that was pulled will be used throughout the mortgage process. The original credit scores from the initial credit report pulled to issue your pre-approval letter is good for 120 days. Any credit report that is older than 120 days needs to get repulled and the new credit scores will apply.