Credit Inquiries DO MATTER!!!!!!

By
Mortgage and Lending with Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 NMLS ID# 158606
https://activerain.com/droplet/4BRp

I wrote a post about credit scoring entitled What You Need to Know About Credit Scoring. There were 5 variables that affect the credit score of the borrower. Needless to say, I really think that while credit inquiries have the lest amount of weight towards your credit, it also happens to be the most misunderstood category.

The 5 Categories that Specifically Impact your Credit are:

  1. Payment History
  2. Outstanding Credit Balances
  3. Credit History
  4. Type of Credit;
  5. and Inquiries

Credit Inquries are the least impactful, but probably the most frequently misunderstood.

So... what's the 101 on credit inquries? What's an inquiry? Basically, it's when you specifically authorize lenders to look into your credit, specifically from a credit bureau.

IF THE CREDIT INQUIRY WASN'T AUTHORIZED BY YOU, THEN IT'S NOT A HIT AGAINST YOUR SCORE!!!

Know that so that you don't freak out! Does applying for new credit affect my credit scores? The short answer is probably. The reality is the more you apply for NEW CREDIT, the more likely it is that you need credit to live.

In other words, you're having a hard time making ends meet and, therefore, are applying for new credit to shoulder some of they debts. If you need credit to live....in general, that ain't a good thing! Looking for credit too much means that your score is probably gonna drop! How much will credit inquiries affect my score? Bottom line...it depends. So abstract. So cliche. Really it will affect each person differently based upon their own credit history. For example, don't use credit often and have an inquiry....then don't worry about it. But if you need a briefcase to hold all of your credit cards together, then this inquiry is more apt to hurt a bit....at least a lot more than for the dude who has perfect or a stellar use of credit. Here's a good stat for you....

 

Statistically, people with six inquiries or more on their credit reports can be up to eight times more likely to declare bankruptcy than people with no inquiries on their reports. I don't know the science of credit scoring, but I do know that there's a reason for everything. Are all Credit Inquiries treated Equally?

Nope, nada, fogettaboutit!

 

Credit inquiries that go to rate shopping are treated with less scrutiny than those inquiries used to obtaining new credit. You have a 14 day shopping range to look into credit for a mortgage, or getting a better rate. CAPECHE? Bottom line is that for multiple inquries for rate shopping, the scoring ignores mortgage, auto, and student loan inquiries made in the 30 days prior to scoring. -

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Rainer
162,019
Greg Riley
Prudential AllStar Realtors - Rio Rancho, NM
e-PRO,RECS, Rio Rancho Real Estate

Good Point I made appliaction for a Macy's Card yesterday it cost me 3 Points on my Fico score is that significant no! But if I make Ten Applications that's 30 Points and that is significant and creditors would see that I am Credit shopping and likely just hit the Deny button!

Apr 08, 2015 02:31 AM #1
Rainmaker
515,260
Tom Burris
NMLS# 335055 - Baton Rouge, LA
Texas/Louisiana Mortgage Pro - 13 YRS Experience

I have always said that inquiries are a bit overrated. But you make good points about how some people apply for credit to make ends meet. Scary way to live

 

Apr 08, 2015 03:10 AM #2
Rainer
4,205
Ian Smith
Brozville - Eden Prairie, MN
REALTOR, RE/MAX Results Brozville Group

Great info to help ease some of the worry buyers have about credit inquiries, thanks Larry!

Apr 08, 2015 06:49 AM #3
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Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Larry Bettag - what is a 'safe' number of credit inquiries in a 2-year period?

And when is it considered as negative?

Apr 08, 2015 01:42 PM #4
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Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

I have a loan that will renew in about 6 months so I'm working toward doing all the things that will raise my score right now.

Apr 08, 2015 11:43 PM #5
Rainmaker
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Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

I am weary of anything that monitors what we do or don't. Saying that, there are do and don't do's that the general public should know about...thank you and good posting

Apr 09, 2015 12:38 AM #6
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Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

Larry - The 14 day period has only been around for the last several years hasn't it?

Apr 09, 2015 03:30 PM #7
Rainmaker
807,364
Lanre-"THE REAL ESTATE FARMER" Folayan
Keller Williams Select Realtors-Buy a home in Washington DC. Sell a home in Washington DC - Bowie, MD
I don't make promises.I deliver results.SOLD HOMES

In other words, you're having a hard time making ends meet and, therefore, are applying for new credit to shoulder some of they debts. If you need credit to live....in general, that ain't a good thing!-MY AHA MOMENT. Did I just say that? But it's so true. This was written three years. But still valuable information.

May 25, 2018 11:07 AM #8
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Larry Bettag

Vice-President of National Production
What to know how to buy if you're a bit credit challenged?
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