Mortgage Agreement in Principle Soft Credit Check

When it comes to applying for a mortgage, one of the first steps is to obtain an agreement in principle with a lender. This is a preliminary decision by the lender that, based on your financial information, they would be willing to lend you a certain amount of money to purchase a property. But what is a « soft credit check » and how does it factor into the mortgage agreement in principle process?

A soft credit check is a type of credit inquiry that doesn`t impact your credit score. It`s sometimes called a « soft pull » or « soft inquiry » and is often used by lenders to check your credit without your permission. A soft credit check is different from a hard credit check, which is a credit inquiry that does affect your credit score, and is typically used when you`re applying for a loan or credit card.

When applying for a mortgage agreement in principle, most lenders will perform a soft credit check to assess your creditworthiness. This helps them determine if you`re a good candidate for a mortgage and the amount of money they`d be willing to lend you. The soft credit check is usually done by checking your credit report, which contains information about your credit history, including your credit accounts, payment history, and any debt.

It`s important to note that a soft credit check won`t show up on your credit report or affect your credit score. That means you can apply for multiple mortgage agreements in principle with different lenders without worrying about damaging your credit score. However, if you go on to apply for a mortgage with a lender, they will likely perform a hard credit check, which will have an impact on your credit score.

In summary, a mortgage agreement in principle can be an important step in the home buying process, and a soft credit check is typically used by lenders to assess your creditworthiness. Remember, a soft credit check won`t affect your credit score, so feel free to shop around and apply for multiple agreements in principle to find the best mortgage for you. However, if you do decide to proceed with a specific lender, they will likely perform a hard credit check, which may impact your credit score.

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