Comprehensive Breakdown of How Inquiries Effect Credit PublishedPR Web
Boston, MA (PRWEB) June 11, 2012
RoadFish.com mens lifestyle and finance magazine today urged readers to review the following article which gives a comprehensive breakdown of which inquiries will negatively impact ones credit score. Contrary to popular belief, some inquiries dont count very much at all, and the results may be surprising to some. RoadFish.com encouraged readers to brush up on the basics to set themselves up for financial success, and fewer surprises on their credit score.
Kenneth R. Harney of the Boston Herald reported that credit inquiries (requests by lenders and other businesses to pull ones national credit bureau reports) are the most widely misunderstood parts to the mortgage field, according to Fair Isaac Corp. (FICO). FICO senior scientist Frederic Huynh sets the record straight about inquiries, explaining that the reason FICO views a large number of inquiries to ones credit to be an unfavorable factor is because research has proven that people who are looking to open a new credit account are higher-risk consumers and are more likely to have defaults. Huynh is quoted as saying, Statistically, people with six or more inquiries on their credit reports can be up to eight times more likely to declare bankruptcy than people with no inquiries on their reports.
The article goes on to report however that for consumers looking to take out a mortgage, auto loan, student loan, or would like to refinance their existing home, the inquiries pulled by lenders under those circumstances will have much less weight against your credit score. Huynh explained that FICO ignores any inquiries related to ones home loan, auto loan, or student loan for 30 days immediately following the initial inquiry. In this way, any an all inquiries pulled for the 45 days after ones loan application will only count for one. He states as an example that if six lenders were to pull ones credit report, the most hits they would count for is one. Huynh is quick to add that this buffer zone covers those consumers who are shopping around for home loans, student loans, and auto loans exclusively. Inquiries for all other forms of credit count as one inquiry apiece, and can do some heavy damage to your credit score if they are received in rapid succession.
RoadFish.com stated that it considers credit knowledge to be a must for consumers. RoadFish.coms Senior staff writer is quoted as saying, When I speak with friends, family, and acquaintances, I get the impression that many people do not know as much about credit as they wished they did. Its not hard to learn the basics, and I can guarantee that the knowledge can make a big impact down the road. Just the difference between a half-way decent credit score and a really good credit score can mean a savings in thousands of dollars in interest rates, so to me thats reason enough. But the truth is you never know when youre going to need to rely on your credit as proof that youre a reliable borrower, so its good to be familiar with what goes into computing your score so you can actively work to make sure its solid.
In the above-mentioned Boston Herald article, FICO senior scientist Frederic Hyunh stated that credit inquiries tend to knock less than five points off of a credit score per inquiry. And with auto, mortgage, and student loan inquiries, all inquiries combined within a 30-day period will total the worth of one. The article goes on to report however that these types of protected class credit inquiries need to be properly coded by loan officers in order for the national credit bureaus to recognize them as such. It is entirely possible for errors to be made, and inquiries that fall within the 30-day buffer zone to be incorrectly coded and therefore negatively impact ones credit score.
RoadFish.com believes in the importance of checking ones credit report often, to ensure there are no errors that could be dragging down ones score, and urges its readers to keep up with their credit. RoadFish.coms Senior staff writer is quoted as saying, Its simple enough to dispute a mistake or error on your report and get it eliminated. But you cant do that if you dont realize that there is an error in the first place. Thats why I suggest checking your credit at least once a year, and more than that if youre actively working to improve your score, that way you can monitor your progress.
The Boston Herald article includes the advice of Larry Nelson, the owner of credit reporting agency KCB Information Services who works in the mortgage field. Nelson stated that unfortunately errors like improper coding of credit inquiries are becoming more common and can have an extremely negative impact on unsuspecting consumers. Nelsons suggestions for steering clear of such unfortunate circumstances is for mortgage applicants to avoid shopping for anything credit-related, whether it be a credit card, a car, or furniture, in the weeks before a house closing, when their credit will be run a final time.
RoadFish.com is an online men's lifestyle and finance magazine targeted toward men in their 30's and 40's that have already attained a moderate level of success in life, and are striving toward more. It goes over current events of interest to this group, such things as exciting adventures, consumer interests, hot chicks, and the UK economy as well as ways to make more and save more money. It is a publication owned by Purpose Inc.
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