I've heard that every time someone runs you credit score, it affects your rating. Is this true?

Question

I am looking to buy a house and would like to shop around for the best interest rate. However, someone told me that every time a potential lender runs your credit score, it affects you credit rating in a negative manner.

Answer 1

That is true and false. Every time someone "runs" your credit score doesn't mean that you are trying to obtain credit. In most cases, banks and mortgage houses do a consumer credit viewing. Basically, you give them permission to "look" at your credit history on your behalf. They pay a fee for access to the credit beuros data base and view your data. Anyone can look at credit reports if you pay for it.

By them viewing your report in that manner it does not count as an application for credit. When you apply for things that extend credit, that raises what they call a "red flag". Even though you may not even get a loan, credit card or car it can cause a certain type of damage to your credit report.

When you apply for and recieve credit, it doesn't automatically show that you have an open line of credit or fixed loan. It can take anywhere from 45 days to three months and banks know this. The only things that banks see in the mean time is that you applied for the credit but they don't know if you received it or not. Hence the red flag.

Your credit score is basically a measurement on the likelyhood of you defaulting on a loan which most banks typically sale in some form. It could be sold as a third party purchase (which is what happens with most mortgages) or stock market (a banks earnings is all about interest).

What makes a red flag bad is that you could have a high debt to income ratio and in theory can't afford to repay your loan. Which can make it undesireable to give you a loan. Your score may look fine but you could still have a hard time getting the type of interest rate you want.

Some good advice, get a copy of your credit report from all three agencies. You could get it for free or you could pay a fee and get it on the computer and even monitor it yourself. Get a copy of it and take it with you to the banks. Most will give you an estimate of the amount of loan and interest based on that. This will let you shop without having your report queried more than a dozen times.

Initially the bank may be hesitant to base thier estimate off your personal report. Just tell them that you are shopping and you feel uncomfortable with having your credit checked repeatedly even though it may not effect your score (they will say it wont!). Tell them you want an estimate based on the report your received just as a "good and fair idea". Also, when you find a bank to loan you money for a mortgage, they check your credit twice anyways. Once in the begining (as an estimate to determine worthiness) and right before closing on the house to make sure nothing drastic has changed (like a car loan or 5 new credit cards).

So, that is the true and false to your question. Take control of your money because banks want and need to give loans.. Remember that! Also, if you have issues with your credit, I know of a few ways to strengthen your score that most people don't even realize they can do.

I would be more than happy to share the knowledge..

Good luck and take care!

Answer 2

Only in the sense that if lenders are constantly pulling your credit it looks like you are applying for alot of loans which can have a negative effect on your credit score.

If you simply go on-line and get your credit score it should not effect your score at all. Unless perhaps you are doing it 3 times a week. Then that could raise a red flag with creditors.

Anyone who tells you that occasionally pulling your credit score can damage your credit really does not know what they are talking about.

Answer 3

That depends.

If you check your own credit record, it has no affect on your score.

If a company that you currently have a financial relationship with runs an update inquiry, it has no affect on your score.

If you apply for credit is does lower your score slightly -- maybe a couple of points. If you make several credit applications for similar loan products such as a home mortgage they are considered as a single inquiry if they are all within the same 30 day time span.

Multiple inquiries for different types of loan products will each individually affect your score and a flurry of applications for different types of credit in a short span of time can have a major negative impact.

Answer 4

It relies upon.have you ever had the visa and amex enjoying cards for a very good quantity of time and have a sturdy historic previous with those? in case you have and you fairly do not use the shop enjoying cards then you fairly can in all threat pass forward and cancel them. you do not decide to have too many shop credit enjoying cards on you credit through fact it would not look sturdy. additionally, in case you have not used the enjoying cards in over a three hundred and sixty 5 days you may call the credit card company and make beneficial your account remains energetic. some companies will close your account if it incredibly is been inactive for a protracted era. If the corporate closes the account evidently undesirable. You credit record will teach no count in case you closed the account or the corporate did. desire this helps.

Answer 5

That is correct, although payment history, balance to available credit ratio and number of open accounts is far more important. Having a large number of inquiries on your report makes it look like your trying to open to much credit. If most of the inquiries are for mortgage companies, I'm sure that will not hurt to badly as they are all typically for one large purchase rather that several different credit uses such as credit cards. Almost all mortgage companies will tell you after you receive preliminary approval, not to apply for any credit at all including getting inquires because it could mess up you preliminary approval. Good Luck!

Answer 6

Yes, it does. This is because it is placed in your credit file. When the next, potential lender runs your file, they see the previous person's name on your file, so it looks like you applied for a loan and got denied, which sort of looks bad on your file, even if you did not actually apply for the loan, but just had your credit check done by the potential lender.

Answer 7

Yes, that is correct. A good idea is to shop around online, go to the bank website and check out their lending rate. Then you can just visit a couple of places or fill out an application online. If you are only planning on looking into a few places, I wouldn't worry about it affecting your credit score.

Answer 8

yes it does every time someone ask you do you want a credit card from there department store or any where else it takes points off your credit score. don't do it even if saving the 10% on the entire purchase. it is not Worth it. trust me.

Answer 9

It doesn't if they are all checking for the same loan. I.E. Shopping around. It only affects it as "one" inquiry.