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Credit Law Center Mortgage Pre- Approval

Fact or Fiction; A Look At Hard Inquiries

 

What's the Difference Between a “Hard” and a “Soft” Credit Inquiry?

Whether you are applying for a new credit card or a home loan, hard inquiries are constantly present when attempting to build credit. Although hard inquires are one of the most common items found on a credit report, there is still much mystery surrounding their effect on a credit score. In todays “Fact or Fiction” we will be taking a deep dive into hard inquiries to shed light on some of the most common misconceptions and answer some of your most asked questions!

 

What Is A Hard Inquiry?

It is a common misconception that in any instance that there is a request to pull your credit, a hard inquiry will be listed on your report. A hard inquiry will only occur when you inquire for financing with a lender directly. This does not apply when you are inquiring for pre approval or pulling your credit for informational purposes and is considered a soft inquiry. Unlike hard inquiries, a soft inquiry will not appear on your report and does not impact your credit score.

   -Soft Inquiries-

Soft inquiries are a little different from hard inquiries; while they do show up on your credit report, they are strictly for your personal reference and have no impact on your credit score. Soft inquiries are not visible to lenders as they are strictly made for informational and pre approval purposes and are only seen by the consumer. Soft inquiries will fall off of your report in anywhere from 12-24 months depending on their type!

How Long Do Hard Inquiries Stay On A Report?

Hard inquiries differ from other items on your report when it comes down to their expiration date. A hard inquiry will usually stay on your report for about 2 years but only affects your score for about 12 months! Hard inquiries are meant to serve as a timeline of when and how often you have applied for credit and can mean different things to different lenders. Multiple hard inquiries can portray a sense desperation to a lender as it shows that you have attempted to apply and were denied by multiple lenders. In some cases, like when inquiring for a home loan, there is a short window where multiple inquiries will count as a one!

 

How Much Do Hard Inquiries Hurt My Score?

There are many misconceptions about just how much a hard inquiry is “worth” when it comes down to affecting your score. It isn’t a case of “One hard inquiry amounts to 5 points and if I have 10 hard inquiries, that means I’ll drop 50 points”. Hard inquiries do not necessarily have a dedicated point value and their potency really falls to how healthy your credit score is prior. Someone with a long positive payment history and multiple open accounts with low credit utilization will not be as heavily affected by hard inquiries as someone who is new to building credit.

Can I Dispute Hard Inquiries?

Unlike other items on your report that can be disputed due to infractions in their listed information, legitimate hard inquiries are difficult to remove. If a hard inquiry  is pulled from your report without your knowledge, you do have the right to request its removal. This also applies in the instance of identity theft as the application is not legitimate to your inquiry.

Do you have hard inquiries on your report that were made without your knowledge? Do you have questions about your credit report or credit questions in general? f you would like to speak with one of our attorneys or credit advisors and complete a free consultation please give Credit Law Center a call at 1-800-994-3070 we would be happy to help.

free credit repair consultation

       -Disputing Inquiries Made By Car Dealerships-

How to Find the Best Car Dealerships in Los Angeles - Silverback Automotive

 

Disputing multiple inquiries made by an auto dealership is a rough area for many consumers. When submitting a loan application at a dealership, they will often inquire with multiple lenders to attempt to get the best financing opportunity for the consumer. This practice is referred to as shotgunning and is common in every auto dealership and when signing  a car loan application, is essentially giving the dealer permissible purpose to make multiple credit pulls. Depending on the FICO score used, similar to shopping for a home loan, there is often a window where the multiple inquiries will only count as a single inquiry on the report. The FICO score used will depend on which lender is being inquired with.

 

Article by Joe Peters

 

A Guide To Your Credit Mix

Your Fix of the Mix

We all know the importance of having a good credit score.With a high credit score, you can open to door to better interest rates, loans, benefits and more! Good credit can be the deciding factor in whether or not you get approved to rent a home or get a particular  job. Therefore, it’s  is important to  fully understand the various factors that make up your credit, including the credit mix.

To clarify, credit mix is not the most important factor in determining your score. Your payment history carries the majority of the weight, followed by your credit utilization rate and then your credit history and longevity. The good news is, your credit mix comprises  only  10% of your credit score! In the end, your credit mix determines your credit health and can be a beneficial indicator of your credit prowess!

What are the two types of credit accounts?

What exactly is credit mix you might ask? Credit mix refers the different types of accounts associated with your credit report and usually fall into two categories:

  1. Installment loans, in which you borrow a specific amount and have payments due each month for a specific amount of time.
  2. Revolving credit, in which you borrow as much you need and pay it back in either a minimum or full payment until the amount owed is fully paid.

Examples of installment loans are home loans, auto loans, and personal loans. Revolving credit refers  to credit cards; although home equity lines of credit are another example.

 

Understanding Credit Mix - Dollars And Points

What is a healthy credit mix?

If you are looking for a healthy credit mix you will want an even mix of both installment loans and revolving credit .Having a mortgage or auto loan along with a couple of credit cards should set you up with an even credit mix and will reflect positively on your report. On the other hand, if you have only credit cards listed on your report, it can reflect poorly and harm your credit report in the long term.

Now, what happens if you have a few credit cards, but have your vehicle paid off and are all set on your home? Should you take out a personal loan so that you have an installment loan in the mix?

Not necessarily. It is not usually a good idea to borrow money when you don’t need to.Remember, your credit mix makes up only 10% of your credit score.If you are doing well in areas of your credit that hold more weight, such as  credit utilization and payment history then you are more likely to maintain good credit even if your credit mix isn’t as developed as you would like. There is not reason for additional expenses to try and diversify your credit mix!

 

Should I worry about my credit mix?

Every aspect of your credit is important, but don’t fret too much over your credit mix! Not everyone  has that classic mortgage-car loan-credit card mix of accounts. If your score is already high, your credit mix is one of the last things you should worry about! Instead you should focus on keeping your payment history in line and avoiding applying for too many new credit accounts at once.

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Author- Joe Peters

Credit Law Center Mortgage Pre- Approval

Fact or Fiction; A Look At Hard Inquiries

 

What's the Difference Between a “Hard” and a “Soft” Credit Inquiry?

Whether you are applying for a new credit card or a home loan, hard inquiries are constantly present when attempting to build credit. Although hard inquires are one of the most common items found on a credit report, there is still much mystery surrounding their effect on a credit score. In todays “Fact or Fiction” we will be taking a deep dive into hard inquiries to shed light on some of the most common misconceptions and answer some of your most asked questions!

 

What Is A Hard Inquiry?

It is a common misconception that in any instance that there is a request to pull your credit, a hard inquiry will be listed on your report. A hard inquiry will only occur when you inquire for financing with a lender directly. This does not apply when you are inquiring for pre approval or pulling your credit for informational purposes and is considered a soft inquiry. Unlike hard inquiries, a soft inquiry will not appear on your report and does not impact your credit score.

   -Soft Inquiries-

Soft inquiries are a little different from hard inquiries; while they do show up on your credit report, they are strictly for your personal reference and have no impact on your credit score. Soft inquiries are not visible to lenders as they are strictly made for informational and pre approval purposes and are only seen by the consumer. Soft inquiries will fall off of your report in anywhere from 12-24 months depending on their type!

How Long Do Hard Inquiries Stay On A Report?

Hard inquiries differ from other items on your report when it comes down to their expiration date. A hard inquiry will usually stay on your report for about 2 years but only affects your score for about 12 months! Hard inquiries are meant to serve as a timeline of when and how often you have applied for credit and can mean different things to different lenders. Multiple hard inquiries can portray a sense desperation to a lender as it shows that you have attempted to apply and were denied by multiple lenders. In some cases, like when inquiring for a home loan, there is a short window where multiple inquiries will count as a one!

 

How Much Do Hard Inquiries Hurt My Score?

There are many misconceptions about just how much a hard inquiry is “worth” when it comes down to affecting your score. It isn’t a case of “One hard inquiry amounts to 5 points and if I have 10 hard inquiries, that means I’ll drop 50 points”. Hard inquiries do not necessarily have a dedicated point value and their potency really falls to how healthy your credit score is prior. Someone with a long positive payment history and multiple open accounts with low credit utilization will not be as heavily affected by hard inquiries as someone who is new to building credit.

Can I Dispute Hard Inquiries?

Unlike other items on your report that can be disputed due to infractions in their listed information, legitimate hard inquiries are difficult to remove. If a hard inquiry  is pulled from your report without your knowledge, you do have the right to request its removal. This also applies in the instance of identity theft as the application is not legitimate to your inquiry.

Do you have hard inquiries on your report that were made without your knowledge? Do you have questions about your credit report or credit questions in general? f you would like to speak with one of our attorneys or credit advisors and complete a free consultation please give Credit Law Center a call at 1-800-994-3070 we would be happy to help.

free credit repair consultation

       -Disputing Inquiries Made By Car Dealerships-

How to Find the Best Car Dealerships in Los Angeles - Silverback Automotive

 

Disputing multiple inquiries made by an auto dealership is a rough area for many consumers. When submitting a loan application at a dealership, they will often inquire with multiple lenders to attempt to get the best financing opportunity for the consumer. This practice is referred to as shotgunning and is common in every auto dealership and when signing  a car loan application, is essentially giving the dealer permissible purpose to make multiple credit pulls. Depending on the FICO score used, similar to shopping for a home loan, there is often a window where the multiple inquiries will only count as a single inquiry on the report. The FICO score used will depend on which lender is being inquired with.

 

Article by Joe Peters

 

Too Many Inquiries

Low Fico Scores│Too Many Inquiries On My Report

How Do Inquiries Impact My Score?

One of the common misconceptions about a credit score is that inquiries have a major role in the score. If you have looked at your credit score recently and feel that there are not many dings to the report that would cause your score to be low, take a few things into consideration first:

  1. Do you have two or more revolving lines of credit? If so, are these accounts at or below 30% of the limit?
  2. Now, are there any collections, charge-offs or other accounts that are in a negative standing? You’ll want to have these removed from the report.
  3. Lastly, do you have incorrect or inaccurate contact information on your credit report i.e addresses, names, etc?

All of the above scenarios should be looked at before jumping to what your inquiries look like.

One Too Many Inquiries

If you have been credit card or car shopping lately, you may notice a multitude of inquiries on your credit report. It is very common for a dealership to throw your information into their system to see if they can find you a low interest rate at a great loan term so they can sell you the car on their lot.

Understanding how this impacts your score allows you to walk into each situation prepared and knowledgeable. Whether you are applying for a new credit card or a car note a few things.

  • When shopping for a car, research a Credit Union you could get a loan through, rather than the dealership financing option
  • Know your credit score
  • Don’t apply for credit when you don’t need it

Each time you apply or allow someone to check your credit score, you are allowing them to apply another hit to your credit profile.

The best rule of thumb for inquiries is no more than 10 “pulls” on your credit over a 12 month period.

Once you start running into more inquiries than this, your credit score will start to be impacted by them. Again, applying for unnecessary credit lines will start to impact you in a negative way.

I Have Been Denied Credit

If you have run into issues of hoping to start building credit, but have been denied credit cards over and over, there are a few options you have. Applying or inquiring for more and more credit is not helping your scores. You can try a few other options such as:

  • Applying for a  Secured Credit Card
  • CD Builder Loans
  • Second Chance Checking

You can look for other options for credit cards here

free credit repair consultation

What My Credit Score Says

Your credit score tells a lender the likelihood of you to default on a loan in the next 12 months. Credit demonstrates your trustworthiness to pay your bills and loans on time. Keeping this in mind, it is easier to understand what your credit report says about you as a borrower.

If you have late payments, this impacts your score significantly.

Facts on Fico

If you look at the chart above, you notice that your payment history makes up 35% of the FICO score. Therefore a late payment will tank your score! Another large portion of the FICO score rating, is the amount you owe. If your credit card balances are high, the easiest and quickest way to start improving your score is to pay your cards down as low as you can, rather than making the minimum payments.

In order to have a healthy credit profile, it is recommended to have two lines of revolving credit, and two personal (like home and auto) loans. If you have questions about other reasons your scores may be low or would like to speak with an attorney today, please call 1-800-994-3070. We would be happy to assist you further or answering any questions you have concerning your score.

A Note From The Author: The opinions you read here come from our editorial team. Our content is accurate to the best of our knowledge when we initially post it.

Article by Breana Washington

law firm vs credit repair
Too Many Inquiries

Low Fico Scores│Too Many Inquiries On My Report

How Do Inquiries Impact My Score?

One of the common misconceptions about a credit score is that inquiries have a major role in the score. If you have looked at your credit score recently and feel that there are not many dings to the report that would cause your score to be low, take a few things into consideration first:

  1. Do you have two or more revolving lines of credit? If so, are these accounts at or below 30% of the limit?
  2. Now, are there any collections, charge-offs or other accounts that are in a negative standing? You’ll want to have these removed from the report.
  3. Lastly, do you have incorrect or inaccurate contact information on your credit report i.e addresses, names, etc?

All of the above scenarios should be looked at before jumping to what your inquiries look like.

One Too Many Inquiries

If you have been credit card or car shopping lately, you may notice a multitude of inquiries on your credit report. It is very common for a dealership to throw your information into their system to see if they can find you a low interest rate at a great loan term so they can sell you the car on their lot.

Understanding how this impacts your score allows you to walk into each situation prepared and knowledgeable. Whether you are applying for a new credit card or a car note a few things.

  • When shopping for a car, research a Credit Union you could get a loan through, rather than the dealership financing option
  • Know your credit score
  • Don’t apply for credit when you don’t need it

Each time you apply or allow someone to check your credit score, you are allowing them to apply another hit to your credit profile.

The best rule of thumb for inquiries is no more than 10 “pulls” on your credit over a 12 month period.

Once you start running into more inquiries than this, your credit score will start to be impacted by them. Again, applying for unnecessary credit lines will start to impact you in a negative way.

I Have Been Denied Credit

If you have run into issues of hoping to start building credit, but have been denied credit cards over and over, there are a few options you have. Applying or inquiring for more and more credit is not helping your scores. You can try a few other options such as:

  • Applying for a  Secured Credit Card
  • CD Builder Loans
  • Second Chance Checking

You can look for other options for credit cards here

free credit repair consultation

What My Credit Score Says

Your credit score tells a lender the likelihood of you to default on a loan in the next 12 months. Credit demonstrates your trustworthiness to pay your bills and loans on time. Keeping this in mind, it is easier to understand what your credit report says about you as a borrower.

If you have late payments, this impacts your score significantly.

Facts on Fico

If you look at the chart above, you notice that your payment history makes up 35% of the FICO score. Therefore a late payment will tank your score! Another large portion of the FICO score rating, is the amount you owe. If your credit card balances are high, the easiest and quickest way to start improving your score is to pay your cards down as low as you can, rather than making the minimum payments.

In order to have a healthy credit profile, it is recommended to have two lines of revolving credit, and two personal (like home and auto) loans. If you have questions about other reasons your scores may be low or would like to speak with an attorney today, please call 1-800-994-3070. We would be happy to assist you further or answering any questions you have concerning your score.

A Note From The Author: The opinions you read here come from our editorial team. Our content is accurate to the best of our knowledge when we initially post it.

Article by Breana Washington

law firm vs credit repair

The Truth About Inquiries

Credit Reports. The Soft and Hard Pull Inquiry Finally Explained

There Are Two Main Types of Credit Inquiries

Chances are when you have applied for a credit card or a loan, you have heard the term “inquiry.” This inquiry is a credit check to take a look at your credit report, but there is a difference between the two inquiries.

Often times, we hear the same few questions when dealing with clients. Do they impact my score? What is a hard/soft inquiry? Here is the difference:

Soft Inquiry

A soft inquiry can happen when you pull your report on a website such as credit karma, or background check ran by an employer, or applying for utilities. Remember; these are not your true Fico scores. For more info on the difference in scores, view our blog. At the bureaus discretion, a soft inquiry may be recorded on the report. The soft inquiry will not have an impact on the credit score but a hard inquiry will.

Hard inquiry

Lending institutions such as a bank, mortgage lender or credit card issuers will pull a hard inquiry BEFORE they approve you for the credit card, loan or mortgage. This helps these institutions also determine what the interest will be. When your credit cards are paid down (30% or below) and your accounts are in good standing, the chances of you being approved and paying low interest rates is very good.

Hard inquires do mean you lose a few points from your credit score, however most people lose less than five points. These inquires do not have a long term weight on the credit report. You are looking at about a two year window for hard inquiries.

hard-soft-inquiries-credtit-score

If you are curious on how to get a credit score to view your personal report, we can help. You will want to check your scores here.

Do you have inquiries on your credit report?

If there are inquiries on your credit report and you are unsure where they came from, check with a credit repair service such as Credit Law Center-we use the law to help fix your credit in a quick and affordable way! Credit repair companies can help look through the report and address any errors that may have occurred for you to have inaccurate information. We recommend reviewing your credit history often.
Please note that you can only dispute hard pulls executed without your permission. Hard pull inquiries can take up to 2 years to no longer appear on your credit history.

How do I refrain from having too many inquiries?

Every credit card, loan, mortgage application you submit results in a hard inquiry. If you continue to have your report pulled, and those 3-5 points come out every time, you may end up tanking your scores by shopping around. Space your applications out by several months if possible. However, FICO allows 30 days before weighing your inquiries into their algorithms which determine your credit scores. If inquiries occurred within the same period of time, they can be counted as multiple pulls. This is why mortgage companies recommend not having your credit pulled as a hard inquiry due to the possibility of it lowering and in turn qualifying for a higher interest rate and finally potentially unfortunately not buying a home. Nobody wins!

Conclusion

Credit scores have a critical part in our financial outcomes in life. A good credit score is considered to be scores higher than “700”. When applying for credit, take the time to build your scores. Feel free to use our site as a resource, we love answering questions!To get assistance on tracking soft or hard inquiries that could impact your credit scores, inspect credit reports from Transunion, Equifax, and Experian. CLICK HERE to get in touch with a credit analyst for more details.
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A Note From The Author: The opinions you read here come from our editorial team. Our content is accurate to the best of our knowledge when we initially post it.
Article by Breana Washington