Your ‘beacon score’ is an indicator for a lender as to whether a client is likely to make payments on time and in full. The credit score is also referred to as a FICO Score and is a mathematical formulae created by Fair Isaac and Company. The credit score is used by most companies to see if you are a good credit risk or not. Equifax and Trans Union will crunch the numbers from the credit report, and spit out a number somewhere between 300 and 900, or even no number or R for Reject. A score over 680+ is considered excellent. Credit Inquiries Each time a creditor (potential lender) checks your credit report, a record is created of this event. There are two types of inquiries, soft and hard. A soft inquiry occurs when you pull your own credit report. (Worth doing on an annual basis and FREE via mail at either Equifax or TransUnion.).... A hard inquiry occurs when submitting loan or credit applications with your written authorisation to inquire. A lender cannot process a hard inquiry without your written permission.
Effects on Your Score Soft inquires do not affect the credit score. Consumers can pull their own credit score as many times as they wish without repercussions. Hard inquires affect the score to varying degrees. Multiple inquires that occur in a 14-day span are (typically) counted as just one inquiry. This helps those who are credit shopping (mortgages, personal loans, etc.) and need to have their credit pulled several times. Multiple inquiries are rarely the reason that people are denied credit, unless the score was borderline to start with, since the mortgage products and interest rate that you will qualify for are often determined by your credit score. This said, inquiries for ‘good debt’ such as a mortgage have far less impact on one's credit score than multiple inquires for ‘bad debt’ such as a car loan/lease or debt consolidation. Who has access ? Only individuals with a specific business purpose can check your score. Creditors, lenders, employers and landlords are some examples of approved business people. The inquiry only appears on the credit report that was checked. For example, if a landlord uses Experian to check the creditworthiness of an applicant, the credit check will only appear on Experian’s report, not TransUnion or Equifax. Conclusion Having a few inquiries in a period of a couple of weeks while determining whether to work with a specific Mortgage Broker will (in most cases) not have a notable negative impact on one's credit score. If your score is at or near 600 or 680 then one must be more cautious with inquires as this affects certain mortgage product availability. Working with an independent Mortgage Broker typically results in one inquiry on your bureau for the use of multiple lender partners of that Broker. Thus more than one rate-hold can be placed with more than one lender without negative credit consequences via a Broker. Here are the top tips to consider when trying to improve your credit score:
The good news is that your credit report is a working document. This means that you have the ability over time, to repair any damaged credit and increase your credit score. If you are not sure how to read your credit report and need someone to review it, get in touch with me at 647-893-2535 or [email protected] I will be happy to help! Sign Up Here for Monthly Mortgage Updates
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