One of the more resilient pieces of consumer-pop-mythology is the idea that a credit inquiry or multiple credit inquires will always and universally screw up your credit score.
As a point of fact, this is not true, and with apologies to George Orwell:
Not all credit inquiries are equal, but some inquiries are more equal than others.
It is true that opening or applying for multiple new credit accounts in a short period of time represents higher risk and may adversely impact your score, but this is not the same as rate shopping, and the FICO scoring model is tuned to recognize and discount ‘normal’ shopping behavior from credit-seeking-binges.
“Looking for a mortgage, auto or student loan may cause multiple lenders to request your credit report, even though you are only looking for one loan. To compensate for this, the score ignores mortgage, auto, and student loan inquiries made in the 30 days prior to scoring. So, if you find a loan within 30 days, the inquiries won’t affect your score while you’re rate shopping. In addition, the score looks on your credit report for mortgage, auto, and student loan inquiries older than 30 days. If it finds some, it counts those inquiries that fall in a typical shopping period as just one inquiry when determining your score.”
So the next time a lender (or anyone else) suggests you avoid inquiries from other mortgage lenders, know that they:
a) Are trying to discourage you from shopping around.
b) Have no idea what they are talking about.
In either case they should be ignored.