 Credit Issues: What You Need to KnowThe Truth about Credit InquiriesEach time you apply for credit, the credit reporting agencies will place an inquiry at the bottom of your credit report. While a few inquiries are fine, too many can result in lowering your credit score and denial of credit. Creditors or potential lenders look at too many inquiries as "Desperate" and base part of their credit decision on those excessive inquiries. In addition, the potential creditor has no idea that those inquiries have not resulted in a recent loan which could disqualify you from being approved. NOTE: To inquire about a loan without having your credit pulled, try LoanQuery, the quick and easy way to ask questions before you apply for a mortgage loan.You should limit your inquiries and dispute any that you do not recall or agree with. Disputing inquiries to the credit bureaus is pointless. They are not responsible for removing those and do not investigate them unless the originating creditor instructs them to. There are different types of inquiries and some are nothing to worry about. Here are some example inquiries and what they mean: You reviewed your credit: This is where you have have requested a copy of your credit report. This is a "soft" inquiry and does not negatively affect your credit. It is not seen by potential creditors. (Neutral) Credit Bureau Review: This again, has no impact on your credit and simply means the bureau reviewed your file. (Neutral) Creditor review: This is simply a standard review that is done by existing creditors. It also does not impact your credit. (Neutral) Credit Request: This can be negative if you have too many. Inquiries remain in your profile for 2 years, so too many of this type can be negative and result in denials. (Negative) Collection agency review: If you have any inquiries from a collection agency who has begun collecting on an expired debt (expired under the statute for reporting, which is 7 years) then that does not qualify for a permissible purpose and should be removed. Inquiries from a collection agency are very negative. (Very negative) IRS: Inquiries from the IRS usually tell a potential lender that you are either being audited or have a tax lien pending. (Very negative) Tenant Screening: This type of inquiry is O.K. It simply shows you are moving or did move and the landlord ran a credit check. (Neutral) Naturally, your credit report can have a dramatic impact on your financial stability. Never assume, however, that your credit report is "so bad" that you aren't able to stop paying too much for that tiny apartment. Only an informed lender should make that assessment. These days, there are many options available to home buyers, even those with credit problems. Even if you don't qualify right now, your loan consultant can tell you how to get back on track and give you an idea how long that will take. After all, if you're currently renting your home, you're probably already paying a mortgage - just not your own! |
