Why Pulling Your Credit While Shopping for a Refinance is a Smart Move

Posted by Elijah Murray on April 17, 2014

We’ve all heard stories of people having their identity stolen and the need to check your credit regularly. However, there are lots of people that don’t pull their own credit before shopping for a home loan or refinancing. Getting a mortgage is one of the largest financial commitments most people will make in their lifetime. It just makes sense to ensure your credit report is correct before beginning the loan application process.

Know Your Credit Score

Even if you’re not a victim of identity theft, it’s not uncommon for the credit bureaus to report incorrect information on your credit report. This could be something as simple as missing addresses, payment information or account balances. Also, this incorrect information could include accounts opened by other people with similar names or addresses. Relatives with the same first names will often have this problem resulting in children having mortgages on their credit report before they’re old enough to drive. At best, these problems can slow the loan process. At worst, they could result in a higher interest rate or your request for a loan is denied. Clearing up these inconsistencies can save a lot of time and hassle when you start negotiating the terms of your home loan.

Negotiate your Mortgage, Refinance or Home Loan with Confidence

A clean credit report filled with on-time payments and accounts in good standing will go a long way toward getting your loan approved. However, your credit score can earn you a lower interest rate because it signals less risk in your application.

Not having your credit pulled leaves you unable to get a truly accurate quote. This can lead to substantial delays and disappointment when shopping for a refinance or home loan. As an example, if you start shopping with an estimated credit score of 700-719, let's say you receive a quote at 4.5 percent on a 30 year fixed with $2,500 in closing costs. But, what if you pulled your credit while shopping and you got a better deal as a result of finding that you have a better score than you thought! This can have massive financial implications and it’s best avoided by pulling a real-time credit score to confirm your quote is 100 percent accurate and correct.

Thoughts or ideas you'd like to share with us? Add a comment below.