Credit inquiries lower my scores drastically right? Wrong!

credit inquiryI haven’t seen my credit report since earlier this year, it was fine. It’s OK to check it once every year or two, right? Wrong!

It’s a common belief that credit scores will go down as a result of too many inquiries and reduce your attractiveness as a credit seeking consumer. Down, lower, less being the key word sparking this huge myth nationwide; the myth is not that it will decrease your scores, but that it will drastically bring them down. Only occurring if you frequently inquire your credit; by that I mean obsessive applying for credit daily/weekly. As a Mortgage professional specializing in Consumer Credit and Financial Planning, I will tell you that it’s rare see a credit report without the words ‘Inquiries Impacted this score’ under a score on a credit report. These words are usually followed by “but not significantly” and a lowering of more than 1-3 points is extremely rare and minimal on a credit scoring range of 300-850.

In fact, the common inquiries of impact show up on reports that do not have an inquiry listed in the 90-180 days before the credit was pulled. The factor is normally removed completely if it’s been more than a few years since an inquiry occurred.

A spreading reason of this myth is the fact that Competing Mortgage Loan Originators have been known to over emphasize the negative effect additional inquiries may have on your scores implying a possible loan denial. This practice occurs to deter and preventing further competition for the loan for the simple but hard to accept reason that a legitimate rate quote or pre-qualification letter is not possible without having your credit viewed. To repeat, an interest rate provided for auto, home, or credit card prior to your credit being pulled is meaningless. Every applicant has to qualify with credit history, income level, and many other factors; it all begins with your credit report. You may be aware of or offered the daily rates, or through the many rates advertised on billboards, painted in neon on glass windows, on TV, in the paper, and all over the internet. They again, mean nothing without a Credit Inquiry.

Reluctance to check your credit may be hard to let go of as your parents and friends instilled it in you. It’s far more important knowing the real factors driving your credit up or down, how much a pleasant sounding lowest interest rate will cost, and overall, what the other determining factors necessary for your Credit Approval.

Basically, we see and hear that our credit is more important than ever in today’s market. Also, we know Identity Theft is the most rapidly growing crime worldwide so protecting ourselves and our credit scores is a major priority. Checking one of the 3 credit bureaus every 3 months is an excellent practice to get into. (Experian, Transunion, Equifax) It’s also good to know how to read the report and where to look for possible negative information. There are several means to obtain your report at no cost, gimmick, later sign up fee, or membership once a year per Credit Bureau. These can be online, verbal requests over the phone, or even written requests. Make sure there’s no free trial period followed by monthly fees. These can cost over $150 a year and basically serve as a notification of bad information on your credit whereby no further advice or direction is given on how to correct or repair your report.

With a common name like Chris Brown, I’ve had to request corrections for mistaken identity and incorrect accounts since I pulled my first credit report at the age of 22. These were not just other Chris Brown’s that lived near me. They were out of state, had different Social Security numbers, different birth dates, and had different spelled last names entirely. Browne and Brownlee were my first 2 collection accounts on my report. Over the years, I’ve had different additions to my report including different SSN#’s, addresses, and accounts fortunately not in my name but in bad status on my report. The mystery of skip tracing errors and erroneous reasons as to why this could happen with billion dollar corporations is unknown and I’ll leave speculation alone for this article.

The bottom line is a full name, SSN#, birth date, and address are the only thing requested and needed to pull your report; variations of those 4 can show up and be linked to you as a credit applicant.

Other than checking 1 of the 3 credit bureau reports every quarter, more steps can be taken to protect any bad information being attached to your report. A consumer statement up to 100 words can be added to all 3 of the reporting bureaus reports for free over the phone with one of the bureaus. I described my names commonality and possible confusion of other Chris Brown’s on my report, my most frequent state of residence, my SSN#, and Date of Birth. This can help a bank or lender, employer, or landlord differentiate identity and account information on your credit if such a mistake occurs when they run your credit.

I offer a credit review every 3 months at no cost as part of my service to new and existing clients. It’s good to have a second set of eyes on your report from a trusted source, if not your mortgage or financial adviser, a credit connoisseur in the family.

This article was brought to you by my guest author and friend (contact him to get your free credit report, make certain you’re getting the best mortgage rates if you’re just starting out or even if you’re considering a refinance – I’m certain it won’t be a waste of your time – Mark.

Chris Brown
Mortgage Banker
Midwest Mortage Capital
St. Louis, MO

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