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Avoid credit dings when mortgage shopping

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Borrowers in distress often contact many lenders hoping to find one who will approve them. For this reason, multiple inquiries can have a negative impact on a consumer's credit score. But multiple inquiries can also result from loan applicants shopping for the best deal. The challenge to the scoring system is to distinguish borrowers in shopping mode from borrowers in distress mode.

Hard inquiries vs. soft inquiries

Consumers need not be concerned about inquiries they make, such as ordering a credit report. Self inquiries don't affect the credit score. Neither do inquiries from your existing creditors, potential employers, or businesses considering whether or not to solicit you. These are sometimes called "soft inquiries."

The inquiries that may affect your credit score are those by new credit grantors to whom you have given your Social Security number along with explicit authorization to check your credit. These are &qu...