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The Myth of Multiple Mortgage Credit InquiriesPosted by
Don’t let the fear of multiple credit inquiries keep you from shopping for a mortgage.
Fact: Your credit score plays a significant role in your life. Scores can determine insurance rates, employment, opening a bank account, and borrowing money like mortgage lending.
If you would like a refresher course on how your credit scores work, check out our blog post on credit scores.
Applying for too much new credit in a short period of time can adversely affect your hard-earned score. So it is natural to be nervous about shopping for a mortgage. But the major credit bureaus see the value of comparison shopping – and that’s why they cut homebuyers some slack.
Types of Credit Inquiries
Credit inquiries are broken down into two main groups: hard inquiries and soft inquiries. “Hard inquiries” may affect a credit score, while “soft inquiries” do not affect a score. It is important to understand the difference when applying for new credit.
Soft inquiries (also known as “soft pulls”) typically occur when a person or company pull your credit as part of a background check. Since soft inquiries are not an application for new credit, they won’t affect your credit scores.
Hard inquiries (also known as “hard pulls”) occur when a financial institution, such as a lender or credit card issuer, checks your credit when making a lending decision. Your mortgage consultant will need to take a look at your credit report to complete your pre-approval you to purchase a home. Granting a lender permission to pull your scores – constitutes a hard inquiry and can lower your credit.
The good news is the “hit” to your credit is typically just 3-5 points.
Shop Multiple Lenders, Get One “Ding” On Your Credit Report
The important concept is that — unlike applying for multiple credit cards — when someone applies for several mortgages, they won’t get “dinged” for multiple, consumer-initiated inquiries. This is because when they apply for five credit cards, they’ll likely get the option to use them all five. By contrast, with the mortgage applications, they’ll only get approved once.
As such, the credit bureaus have made it a formal policy to permit “rate shopping.” In fact, it’s encouraged.
Borrowers have the right to shop with as many lenders as they like. The secret though is for a client to do their shopping for a mortgage within a limited 14-45-day time frame. If you time the inquiries correctly, the credit bureaus will acknowledge the first credit pull as a “ding” — remember, only 3-5 points — but will ignore each subsequent check.
No matter how many credit checks you do, the mortgage inquiries will always get lumped into a single credit score “hit.”
So, happy shopping! We would love a chance to work with you. To get started, give us a call or apply online today!
Sources: myFICO.com, www.consumerfinance.gov
Equifax Data Breach: What should you do now?Posted by
Last week, credit-reporting bureau, Equifax, confirmed a massive cyber security incident, which potentially compromised the personal information of about 143 million U.S. consumers.That means that the chances you are affected are pretty high.
Equifax, one of the three major credit bureaus, lost control of customer data that included Social Security numbers, home addresses, credit card numbers, drivers license numbers and birth dates.
WERE YOU AFFECTED?
Even if you don’t think you’re a customer of Equifax, there’s a strong possibility they still have your data. As a credit reporting agency, Equifax gets information from credit card companies, banks, lenders, and retailers to help it determine a person’s credit score.
To find out if your data has been compromised, use the Equifax Impact Finder. There have been reports that this tool is less than accurate, so at this point, we suggest that any person with a credit history take action as if they were affected.
WHAT SHOULD YOU DO?
- CHECK YOUR CREDIT REPORTS: You can view your credit reports for free at AnnualCreditReport.com. You’re entitled to get a free copy of your credit report from each of the three big agencies once every 12 months. Review it closely for unauthorized accounts or any mistakes.
- FREEZE YOUR CREDIT: One of the most reliable ways to prevent someone from opening credit cards in your name is to place what’s called a “credit freeze.” A freeze stops thieves from opening new credit cards or loans in your name, but it also prevents you from opening new accounts. So, each time you apply for a credit card, mortgage or loan, you need to lift the freeze — with the PIN you got when you froze your credit — a few days beforehand. To freeze your credit, contact each of the credit bureaus using these phone numbers:
• Equifax: 1-800-685-1111
• Experian: 1‑888‑397‑3742
• TransUnion: 1-800-680-7289
- SET A FRAUD ALERT: A fraud alert is another way to make it hard for identity thieves to open accounts in your name. When you set a fraud alert, credit card companies will be required to verify your identity before opening an account. That, combined with the credit freeze, is a great way to keep your credit secure. To set a fraud alert, contact just one of the credit card bureaus and ask for an initial fraud alert. Once the alert is in place, it will last 90 days. After that, you’ll have to renew it. Here are the appropriate phone numbers for the bureaus (remember, just call one):
• Equifax: 1-888-766-0008
• Experian: 1-888-397-3742
• TransUnion: 1-800-680-7289
- STAY UPDATED: Equifax has created resources to assist consumers. These include online information at www.equifaxsecurity2017.com and a call center at 866-447-7559.