Posts tagged credit inquiry
Unsecured loans no credit check- All the ease you can have with loans
Jul 30th
Tired of airless old bankers who say no? Learn how to obtain an unsecured loan no credit check without a credit inquiry now.
Will Credit Inquiries Hurt Your Credit Score?
Jul 9th
You’ve probably heard that applying for a loan can affect your credit score. Indeed, many realize that when a creditor looks into your credit in order to make a decision about a credit application, it can have a negative impact on your credit score. The fact that some inquiries into your credit can hurt your score has led to the myth that all credit inquiries can hurt your credit score. The truth is that there are two main types of credit inquiry: “Soft” and “hard.” Only the hard inquiry is damaging to your credit score.
Soft Credit Inquiry
It is important to realize that when you check your own credit report, it will not negatively affect your credit score. Your own inquiry is known as a “soft pull.” It’s made in order for you to keep track of your credit activity, and check for accuracy. Since you aren’t applying for credit when you are just checking your own report, the credit bureaus and credit scoring models won’t hold it against you.
Another type of soft inquiry is that made when companies check your credit history in order to send you “pre-approved” offers. These types of inquiries are known as “involuntary,” since you didn’t ask to have your credit checked. So, even though a company might have viewed your credit history and/or score to determine whether or not to send you an offer, these inquiries will not negatively affect your credit score.
Hard Credit Inquiry
On the other hand is the hard credit inquiry. Sometimes these are called “voluntary.” “Hard pulls” result when you are applying for credit or some services. Credit card issuers, mortgage brokers, and other lenders institute a credit request at your behest, and this is reported on your credit history, showing that you are looking to obtain new credit. Many cell phone providers, cable/satellite TV providers and others will perform a hard credit inquiry when you apply for these services.
A hard inquiry can hurt your credit score. However, the harm done is usually relatively small. While credit scoring formulas are kept mostly secret, it is estimated that credit inquiries make up no more than 10% of your credit score. The most important factors are your payment history and the amount of debt you have. However, some lenders become concerned when they look at your credit report and see several attempts to obtain new credit in a six-month period of time. (Although most understand if you have a cluster of inquiries over a few days as a result of shopping around for a low mortgage rate.)
Reading Soft and Hard Inquiries on Your Credit Report
The credit bureaus don’t label credit inquiries as “hard” or “soft” on your credit report. Different language is used:
- Experian: “Requests viewed by others” represents a hard pull. Creditors can see these when evaluating you for creditworthiness. “Requests viewed only by you” represents the soft inquiry. These are credit inquiries that are available for your information (so you can see which companies are checking your credit without your request), but aren’t visible to creditors evaluating your credit application.
- TransUnion: “Regular inquiries” are those that are equivalent to hard inquiries. They will remain on your TransUnion report for two years. “Account review inquiries” are the soft pulls made by you or by companies interested in sending you marketing materials.
- Equifax: “Inquiries in the last 12 months” are hard pulls that were performed at your request. “Inquiries that do not display to companies and do not impact your credit score” offers a pretty straightforward explanation of a soft pull. Equifax also has one more designation, unique to the credit bureau.: “Companies that requested your credit file.” This is a list of companies that asked for your file, so you can see who is interested in you. This information is also available to creditors looking to evaluate you, although its impact on your credit score is unknown.
For the most part, if you are responsible with your money and credit decisions, and make payments on time, and avoid applying for a great deal of debt, credit inquiries are unlikely to have a large impact on your credit score.
This is a guest post Miranda Marquit is a journalistically trained freelance writer and professional blogger working from home. She is a contributor for Mainstreet.com, Personal Dividends and several other sites. Miranda is not affiliated or endorsed by LPL Financial. The opinions voiced in this material are for general information and are not intended to provide specific advice and/or recommendations for any individual.
Fannie Mae’s Loan Quality Initiative : Repulling Your Credit Just Before Closing
Jun 8th
A new loan quality initiative from Fannie Mae is making it harder for Lake Mary home buyers and refinancing homeowners everywhere to close on a mortgage.
Beginning June 1, 2010, with all new applications, Fannie Mae wants lenders to verify that borrowers have not taken on new debt during the underwriting phase of the mortgage.
If new debts are found, the mortgage is subject to a re-underwrite and a possible turndown.
For Fannie Mae, the goal is to reduce the number of loans that go bad because of new, non-disclosed debt. Lenders have the freedom to verify in whatever manner they wish, but in most cases, the verification process will amount to a credit re-pull made just prior to closing.
The underwriters will be looking for 3 things in particular — even after your loan is approved.
First, your updated credit report will show your current credit card bills and minimum monthly payments. Those numbers will replace your original numbers made at the time of application. If the debts exceed a certain threshold, your loan will be denied.
Second, underwriters will be looking at your updated credit score. If your FICO has dropped below minimum lending standards, your loan will be denied. Or, you may be subject to a new loan-level pricing adjustment.
Loan level pricing adjustments are mandatory loan fee based on your credit score.
And, lastly, underwriters will be looking at your credit report’s Credit Inquiry section. The goal is to see if you’ve been applying for credit elsewhere. Underwriters can use this information at their discretion.
Fannie Mae’s Loan Quality Initiative is just one more way that the government-backed group is trying to improve its loan pools. Unfortunately, it’ll mean more turndowns for mortgage applicants.
Therefore, take extra care of your credit between the time of application and the time of closing. Don’t buy new cars, don’t buy new appliances, and — most definitely — don’t open new credit cards. Be extra safe with your credit because a mortgage application that’s supposedly cleared-to-close can be revoked at the eleventh hour.
When in doubt, talk to your loan officer about what may or may not trigger the Loan Quality Initiative. Your loan approval is at stake.
Credit Inquiry Removal Service
May 24th
Inquiries are terrible because too many of them can point toward a creditor that you're “credit hungry” and may be in financial trouble.
Continuing Making Work Pay problems
Apr 13th
Here's a tax season newsflash that's no longer news to anyone: Many Filers Confused by Stimulus Tax Credit.
I've heard this complaint all filing season from readers and tax professionals (and my own family!).
Sadly, the cliche that no good deed goes unpunished is never more evident than when Congress creates a new tax law and the IRS implements it.
The Making Work Pay credit was designed to give single workers a credit of up to $400 ($800 for married couples filing jointly). So that people could get use of the money sooner, payroll withholding tables were adjusted to reduce the amount of federal taxes taken out of worker paychecks.
Worse for politicians, folks have gotten used to rebate checks. Now that seems like real money! The second most common question about the Making Work Pay credit has been "Why couldn't they have sent us rebates again?"
That's a whole other blog post (which I touched on back in July in this post's section entitled Why I hate rebates). Right now, though, suffice it to say that it is what it is.
And that leads to the most common credit inquiry: "Do I have to do something in connection with that credit we got in our paychecks last year?"
The short answer is "Yes." You need to file Schedule M.
New
credit, new — and overlooked — filing duties: I know its seems counter intuitive, since your payroll taxes were reduced last year because of the credit.
But just like your payroll taxes don't officially count until you enter the amount on your return, the Making Work Pay credit isn't, well, credited, to you until you claim it.
Unfortunately, more than 4 million filers have neglected to claim this credit so far this filing, says the IRS. As an estimated 60 million of us finally send in our returns this week, expect more missing Schedule Ms.
The IRS says its employees are correcting returns that are missing the schedule and not officially claiming the new credit. That's nice of them. But it also slows down the overall processing of returns, so refunds will be delayed, too.
How the credit fits into filing: If you look at your actual tax return, you'll get a clearer idea of why you need to claim the credit.
On page 2 of Form 1040 in the section titled "Payments" (lines 61 through 71), the Making Work Pay credit amount goes on line 63. That figure is calculated on Schedule M and then transferred to the return.
That entry is right there along with estimated tax payments you made last year, as well as your withholding on your W-2.
There's a similar place for the credit amount on 1040A.
If you file the 1040-EZ, you figure your credit using the worksheet on the back of that shortest tax return.
The bottom line is that to ensure you get your $400 or $800 if you're married filing jointly, complete Schedule M and then enter that amount on your
1040.
My new-look Bankrate blog: I talk more about Making Work Pay confusion in my other blog over at Bankrate.
When you go there to check it out, you'll notice that the site has made some changes. My blog is no longer Eye on the IRS. That's why the eyeball is gone from the right nav bar; some folks who thought it was a bit creepy are glad about that!
Instead, the tax blog is now simply called Taxes Blog.
Personally, I miss the alliterative cadence of the old name. The new version, however, does allow for more timely posting over there and readers now have the chance to comment. Overall, it's a good move.
And I promise not to double up in the future (or not very much!). But this Making Work Pay deal is still such a mess that I felt it warranted coverage on both sites.
Related posts:
- File Schedule M, or not, and other tax-filing mistakes not to make
- Schedule M errors cropping up
- Making Work Pay tax problems … again
- Schedule M, yet another new form
- Did you get a recovery payment?
- Don't spend money to save tax dollars
- 7 new tax laws that could save
you money - Don't overlook these tax breaks
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How Credit Inquiries Affect Your FICO Credit Score
Jan 7th
Every FICO credit score is made up of many different parts. How many accounts you have open, how much credit you are utilizing and whether or not your credit accounts are in good standing all determine that magic 3-digit number. But one factor that makes up about 10% of your credit score that many people overlook is credit inquires.
A credit inquiry occurs every time you apply for a credit account. When you apply for credit, you authorize creditors to ask or “inquire” for a copy of your credit report from the major credit bureaus. Whether you are denied or approved for the credit account does not matter. But what does matter is the type of inquiry. Different types of accounts affect your credit score in different ways and the length between inquires is also of great importance. With all of the ways that a credit inquiry can affect your credit score, lets define a few key terms and see just how much your score can drop when you are looking for new credit.
First, let’s clarify the difference between a “soft” credit pull and a “hard” credit pull, as we will be discussing how a hard credit pull affects your account.
- A soft pull, also known as an involuntary inquiry, occurs when creditors want to send you pre-approved offers. That credit card solicitation you received in the mail was probably the result of a soft pull on your credit. Potential employers may check your credit as do your existing credit card accounts, both of which would be soft pulls. And if you check your own credit score, that’s considered a soft pull, too. The key is that a soft pull does not affect your credit score in any way.
- A hard pull, also known as a voluntary inquiry, occurs anytime you actively seek credit and fill out an application. The lender will run your credit report and determine whether to approve your credit application and under what terms. A hard pull on your credit report will affect your credit score.
Next, it’s important to understand that not all hard pulls on your credit report are created equal. For example, applying for multiple revolving accounts such as credit cards in a short period of time represents greater credit risk under the FICO scoring system. Because applying for multiple accounts is viewed as a credit risk, it will negatively impact your credit score.
As an aside, some have used “Credit Card Arbitrage” to avoid the immediate sting of hard pulls on their credit score. The idea behind credit card arbitrage is that you can apply for a lot of credit cards within a short amount of time to take advantage of no interest introductory offers or sign-up bonuses. If you apply for many cards at the same time, the credit card issuers will not see the negative impact of all the inquiries when they evaluate your application. Your score will be negatively impacted once the credit inquires appear on your report, but not before decisions have been made on the credit card applications.
While applying for multiple credit card accounts in a short time period can hurt your credit score, rate shopping for other types of credit is different. For example, you may submit multiple credit applications when shopping for a mortgage, car loan or student loan. Known in the myFICO world as “rate shopping,” the credit scoring system understands that you are shopping for the best rate, not actually applying for multiple mortgages. Assuming you actually open one mortgage, car loan, or student loan account, FICO will treat the multiple applications as just one inquiry.
It’s also important to understand that the impact of credit inquires can vary from one person to the next. The impact can vary depending on what accounts you already have, your current credit score, the length of your credit history and so on. A person with a credit score of 750 that applies for a credit card will not be affected the same way that someone with a 500 credit score is affected when applying for the same credit card. While it’s impossible to exactly predict how an inquiry will affect your score, myFICO does offer a credit score simulator that will give you some idea. You can get free access to the credit score simulator if you sign up for myFICO’s free trial of Score Watch.
One thing to keep in mind is that applying for new credit can also improve your credit score over the long run. Remember that one of the key factors used to determine a FICO score is credit usage (how much you owe as compared to available credit). New accounts increase your available credit, which can be helpful so long as you don’t max out the available credit. When I use myFICO’s credit simulator and assume I open a new credit card account with a $5,000 line of credit, the simulator predicts that my new score will go fall within a range of 10 points lower to 10 points higher than my current score.
As long as you manage your finances appropriately, you should find that credit inquires play a relatively small roll in determining your FICO credit score. Nevertheless, if you are fighting to improve your credit score, do not take credit applications lightly. Apply for credit with care and only if you really need the credit.
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