Home Loans And Pulling Credit Reports
When home prices drop at incredible rates, you may be considering getting a mortgage loan to make a home purchase. You may submit a mortgage loan application to several banks so that you can get the best loan possible. Doing this may seem like a good idea, but did you know it can also affect your credit report? That's right. Inquiries and pulls of your credit report can affect your credit score.
FICO and Credit Reports
Your score can be simple to read, but there can be several factors that compromise it. According to FICO (the company who came up with the credit score system), your credit history, payment history, current debt, new credit and other factors make up your score. Current debt and payment history make up the largest parts at around 32% each.
Which Inquiries Count
If you went with one of those online companies that shops your loan, for example, every company that made an offer or thought about making one would probably be entered on your credit score. But FICO accounts for this if it notices the same types of loan inquiries within 30 days. It will ignore ones older than the 30-day period. In other words, it's best to "loan shop" in a short period of time so that FICO can account for them basically as one inquiry. Not every inquiry counts, either. FICO only uses mortgage, auto and other credit inquiries. Employers and businesses that pull your report for credit checks have no affect on your FICO score.
So can inquiries affect your score? Yes, but not by much. However you don't want to give the impression that you are desperate to get credit from several different places over lengthy periods of time. A creditor can see this as risky behavior, regardless of how good your credit score is.
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