Posts Tagged ‘Score’
Credit Card Debt Settlement – It may be worth sacrificing your credit score
Anyone in advertising will tell you that the most effective marketing campaign is one that manages to attach an emotion to a product. Clothes, makeup and weight-loss products are marketed to women on the basis that the they will feel sexier, prettier and more attractive, ultimately leading to love. Cars, beer and aftershave are marketed to men on the basis that the they will be “cooler” and attract prettier women. Coca-Cola and McDonald’s show people laughing and having fun, suggesting they will feel happy when drinking a Coke or eating a Big Mac.
Similarly, we are taught through lending practices, parental suggestion, bank advertising and social pressure that a poor credit score suggests not only the loss of untold dollars due to higher interest rates on loans, but amazingly, that a high credit score makes you a “good” person and a low credit score makes you a “bad” person. Who hasn’t seen the silly television commercials that suggest you’ll be driving a junker car and working at the Renaissance Faire if you have a low credit score?
This identity-attachment we place on our credit score is so subtle that most people do not even realize it is affecting their financial decisions. I’ve actually met people who would love to buy a home but stop themselves with a fear-based rational such as, “I might lose my job and not be able to make my mortgage payments.” What does that actually mean? The deeper thread goes like this, “And if I miss my mortgage payments I may have to sell the house for less than I owe, or worse, foreclose, and that would hurt my credit score and that would make me a bad person.” People don’t actually put those words to their thoughts but that is the emotional journey they take that prevents them from buying a home.
We’re taught to treat our credit score as if it is part of our identity and guess what? It isn’t.
If you currently have a low credit score and find yourself suffering from the belief that you are a failure, that you are not good with money, or that you don’t deserve a loving spouse, great kids, a good job and “the pursuit of happiness” as much as everyone else does, then discard those thoughts right now. Having a bad credit score doesn’t make you a bad person any more than not wearing designer clothes or driving a sports car makes you unloveable. Your credit score is a product, just like everything else advertised to you, and it IS NOT connected to your identity.
What your credit score IS, is one piece of an overall financial picture that includes your income, your expenses, your investments, your assets, your business, your retirement savings and your debt. I’m suggesting that you look at that whole picture and not make financial decisions based solely on whether or not you might affect your credit score.
If you’re in debt, what that means is that there may be some financial choices available to you, some as small as skipping a credit card or mortgage payment, some as large as bankruptcy or home foreclosure, and inbetween options such as a short sale or debt settlement, that may be viable even if they will lower your credit score.
I know, that’s a bold statement, one that most people would disagree with on face value. To see what I mean, lets look a little deeper.
Your credit score is a vague, logarithmic calculation that assesses risk for lenders. A low credit score doesn’t mean the borrower can’t get a loan. People just out of bankruptcy court routinely receive credit card offers in the mail and we’ve all seen commercials for “low credit, no credit” car loans. More likely than having no access to credit, a low credit score simply means that the borrower will pay more for credit in the form of higher points and interest.
The banking industry would have you believe that, in addition to being a “bad” person, those points and interest on future loans will cost you SO MUCH money that you couldn’t possibly ever consider doing anything that would lower your credit score.
Let’s do the math on what a low credit score might actually cost. Say you are buying a $25,000 car, $5,000 down and $20,000 financed. If you have a “good” credit score, you might get a 5% loan. Over 60 months, the total interest paid will be $2645. With a median credit score you might get a 6% loan which would amount to $3199 in interst. A bad score with a 7% loan, $3761. The difference between the high score and the low score is $1100 in interest over 60 months, about $18 a month.
What about with a house? Say you want to buy a $500,000 home with 20% down (sorry, the 0-10% down days are over for awhile). So you’re financing $400,000 for 30 years. At 5% you’ll pay $373,000 in interest. (I know, brutal, right? Almost 100% interest over the course of the loan. Most people never consider what a home will actually cost by the time they are done paying it off, but that’s another article). At 7%, you’ll pay $558,000 in interest. A difference of $513 a month for 360 months.
The point is, IT’S NOT THAT BIG OF A DIFFERENCE. $18 a month on a $25,000 car. $513 a month on a $500,000 home. Yes, sure, $500 a month is not meaningless, but it’s not the, “oh my gosh I might hurt my credit score what am I going to do?” doomsday heart palpitations that so many people have when they even consider the notion of their credit score being under 700, or under 600.
If you already own your home and don’t intend to borrow money for any big ticket items in the near future, your credit score becomes even less of a factor in your overall financial picture.
When I had an 800 credit score, I was able to get over $200,000 in credit to pursue a business venture. When the business venture didn’t work out as planned and I couldn’t meet my monthly interest payments on my cards, a bankruptcy attorney told me about the process of negotiating settlements on credit card balances, to pay them off for less than the amount owed. My first question was, “how will that affect my credit score?”
In about six months of settlement negotiations, I reduced my credit card debt from $212,000 to $30,000 and I had $115,000 in debt written off. This reduced my credit score by about 200 points, to just over 600.
But I had $115,000 in debt written off, not to mention all the interest I would have paid on the $212,000 in debt at 18-29% over years of minimum payments. I couldn’t buy enough new cars in my lifetime at 2 or 3% higher interest to add up to more than I saved by settling my debt.
Had I been the homebuyer in the example above, I would have paid $185,000 more in interest over 30 years, compared to saving $115,000 in six months.
The point is, if you’re in debt, debt settlement may be a viable option that will save you more money in the long run that you’d save by having a higher credit score and paying a point or two lower on your next car loan.
I’m not suggesting that anyone abandon their credit score to the wind and adopt unsound financial habits. I am suggesting that in the conversations you have with your attorney, accountant, spouse and self, give credit score considerations their proper due. They are a single part of a large financial equation, not the end-all, absolute factor that your lenders and silly television commercials would have you believe.
Increase Fico Scores – The Most Beneficial Techniques For Rising Your Broken Credit Score
Even an superb credit score is usually damaged by delayed monthly payments, bankruptcy declarations, and court charges. A damaged credit score might be repaired however it would take some time and equally supported effort prior to it can return to its glorious days. To raise your credit score, you must abide by all of the techniques we give you with right now and inside the lengthy run, you are going to see considerable improvement inside your once damaged creditworthiness.
To begin with, you should know your current credit score standing for the reason that this may help you follow the methods outlined nowadays. For those who have 300 or highly low credit score and lenders, loan and mortgage providers, and credit card issuers generally turn down your applications, you may have a extended way to rebuild your credit score but there is still hope, do not worry. Consumers with mediocre credit scores in between 500 and 620 can also use the following approaches to improve their credit scores to great standing.
” Going Secure
Customers with incredibly low credit scores have a very smaller possibility of acquiring approved for standard credit card applications, loans, and mortgages. So as to enhance the three-digit gauge of one’s creditworthiness, you should apply for a secured credit card from a bank by opening and depositing into an account intended for the card.
At this point, your card’s credit limit will be according to the out there deposit you produced on your bank account. Also, the secured credit card’s interest rate is greater as compared to classic or the so-called unsecured credit cards. If you can apply for two secured credit cards, this would be far better mainly because you’ll have two credit accounts for increasing your score considerably.
You can begin making use of your new credit cards so that your credit reports at the key bureaus will begin updating every single month. When adequate information and facts has been gathered about your credit history, your credit score plus points will begin to pile up.
” High Risk Loans
The subsequent step right after acquiring secured credit cards is to try to apply for high risk loans. But prior to you do this, you have to carefully look at that you can pay for the monthly installments. If not, then do not do this since it would only trigger more negative factors for the credit score.
When you are productive in acquiring a high risk loan like a automobile loan, for example, the credit bureaus and FICO scoring system will take it as a plus aspect for your creditworthiness. However it shouldn’t quit there; it is best to pay for the monthly installments on a regular basis and timely in order to keep your credit scores moving up.
” The 30% Limit
Now that you are actively making use of and regularly paying your secured credit cards, do not be shocked once you commence receiving pre-approved unsecured credit cards or the regular ones that have lower interest rates. Okay, so you may have been approved for your new credit card applications. Now what? Must you go into shopping spree and max out your credit limit on every 1? No!
Keep in mind, you’re still inside the method of raising your credit score, not ruining it. You must be aware that the FICO credit scoring computation requires about 30% of one’s total score from the difference between your credit limit and utilised credit on every card. This indicates that if you have a $2500 credit limit and also you charged $1000 on that card, you are making use of 40% of the total credit limit.
The FICO scoring method would like to see a bigger distinction between your credit limit and applied credit in order for your credit score to go up significantly. For this we advocate making use of lower than 30% of on all of your credit cards’ limits. By undertaking so, all of one’s credit cards’ good standing will reflect on your scores subsequent month as the credit reports pour into the FICO scoring program.
” Installments and Revolving Accounts
What are installment accounts and revolving accounts? Installment accounts including mortgages, loans, and insurances have a fixed monthly payment plans which must be paid in full as soon as the statement arrives. Revolving accounts, on the other hand, like credit cards, have fixed interest rates but the total balance depends on the utilization of the consumer. Every single month when the billing statement arrives, the consumer is needed to pay the recommended payment for the month and it doesn’t necessarily mean that you simply need to fully pay your total outstanding balance.
Yes, it can be equally recommended that you simply pay each of one’s installments and revolving accounts frequently and timely. Having said that, the FICO credit scoring program puts additional weight on revolving accounts payment. If you pay additional than the recommended payment for each and every month, this may have better repercussion in your credit score.
” Credit History
Older credit histories can catapult your credit scores onto higher ground. Based on Fair Isaac Corporation, the business responsible for the FICO credit scoring method, old credit histories have substantial impacts in your credit score computation. If you have been keeping some of the old credit cards in the closet for awhile, take them out to dinner or to the mall a handful of occasions and see your credit scores raise considerably.
For those who have a good old credit history along with your old credit cards and also you begin using them again, the issuers will begin updating your accounts with the credit reporting bureaus. With older credit reflecting in your credit reports, the FICO scoring system will take this aspect as enormous plus points in your credit score.
Also, for those who wanted to acquire a loan or a mortgage during the subsequent few weeks, you have to stay away from applying for new credit cards because this will only hurt your credit score and about 5 to 100 points might be deducted for new credit accounts produced. It is best to wait until your loan or mortgage has been approved before applying for new credit cards.
” Credit Report vs. Credit Score
Did you know that you’re entitled to a no cost annual credit report from every of the three major credit reporting bureaus? You have to request for the credit reports once each and every 12 months and it requires about 4 to 6 weeks before your reports arrive. Some people decide on to ignore the significance of checking their credit reports but in reality, your credit scores may well be artificially depressed because of erroneous entries submitted by the lenders, processed by the bureaus, and finally, computed by the FICO method.
Knowing that your credit scores are entirely dependent on the credit reports from the bureaus, you have the best to know what items were submitted and which ones had been entered in error. You might be surprised if some transactions aren’t yours and this may perhaps result in an occurrence of identity theft. You need to be wary at all instances and report all erroneous entries that could be affecting your low credit scores.
What Is A Good Credit Score
I get asked all the time, what is a good credit score, and like everything else in life, my response is, it depends. For most people a credit score above 700 is generally considered to be a good score, but if you are emerging from bankruptcy, it may take a while to raise your credit score above 500. At the higher end of the spectrum is a credit score above 800. In the old days, AKA, six years ago, an 800 credit score was pretty common, but not anymore. The credit score range is 300 to 850 and most consider anything above 700 to be good credit. The problem is that each agency has their own way of calculating a credit score.
Then, there is the question of which of the three major credit reporting agencies are you talking about?
Before we begin, please try to remember that you are not your credit score. Yes, you may have had hard times. You may be the victim of an economic downturn and you may have even fallen behind on your bills, but a credit report score does not define the person you are. It is merely an indicator of how likely it is that you will be a good credit risk in the future. Credit scores are dynamic, which means they change every day. Yesterday’s 500 might be tomorrow’s 600.
Here’s a refresher on your question, what is a good credit score.
There exist three major credit reporting agencies in the United States. Each is charged with gathering and reporting the buying and spending habits of individuals who use credit. Since most people are not able to plunk down cash for large purchases, like a home, people rely on the leverage of credit for ownership. This type of spending extends to every day purchases too. Cars, electronics, travel and college, are items being financed. Interest rates are issued depending on risk.
The three major credit reporting agencies are Equifax, Experian and Transunion. If you purchase anything on credit, your credit report score will be recorded in one or all of these databases. Though your score will never be the same from each, your spending habits as well as how timely you pay your lenders are part of the credit matrix which ultimately is defined by a credit report score.
Listed below is a rough explanation of the credit score scale and how your credit report scores are determined. Keep in mind that you are in control of your credit score. Depending on how you handle your finances will determine how much you pay in interest rates.
Approximately 35% of your score is based on your payment history.
Are you late in paying your bills or are you on time? Have you filed bankruptcy? Keep in mind that certain consumer debt, like credit card purchases, are amortized daily. This debt is deadly and best paid earlier than 30 days.
Approximately 30% of your score is based on how much you owe.
There is a formula used that calculated the amount of debt you are allowed to have and how much of that credit you have used up. This ratio is very important as it tells an important story of how well or poorly you are living. If you are relying on credit to finance your lifestyle or if you are a casual user, this is important to lenders. Try to keep this debt to credit ratio under 30%. That means if your credit card limit is $5000, don’t carry a balance of more than $1500 at any given time.
Approximately 15% of your score is based on the length of your payment history.
How long you’ve been at the game of credit is a factor used to determine your credit score. A longer credit history will be a plus as long as you show responsible debt management.
Approximately 10% of your score is based on new credit.
Old credit is better than new credit because it shows history and like a favorite old shirt, the lenders are comfortable with the familiar. A question that keeps coming up is how new credit checks affect your credit score and the answer is that they usually drop slightly. Except when you are shopping for a home mortgage, you can expect that by opening new credit, your score will be affected. If you are shopping for a loan, do so in a fixed period of time and the reporting agency will note this.
Approximately 10% of your score is based on miscellaneous factors.
What type of credit do you carry? Installment loans? Revolving credit, credit cards and auto loans, home loans and various lines of credit. Usually this has a stabilizing effect on your credit score because it is normal for people with longer history to carry these types of debt. Certain loans, like jewelry and last resort types of credit will decrease your score.
You can get assistance if you feel you have been treated unfairly in matters of credit. By law lenders are not allowed to consider race, religion or gender in evaluating your credit applications. Your credit scores too will not be based on these factors and if you believe you are being discriminated because of these, contact an attorney.
Credit Restoration – Steps You’ll Want to Take To Reestablish A Powerful Credit Score Rating
Shoppers with imperfect credit can improve their credit scores by paying frequently and timely for their mortgage and loans also as keep their credit card balances below the 30% mark of their credit limits. Even so, if your credit score is exceptionally low, you might not have the ability to acquire auto loans, house mortgages, health insurances, and credit cards. It would be very complicated to rebuild your creditworthiness if lenders see you as a risky investment.
The very first step you might want to take as a way to reestablish a powerful credit score is by acquiring a secured credit card, getting two secured credit cards could be much better. Secured credit cards may be acquired from lending institutions that don’t have any money-related important risks like banks and organizations offering secured credit cards.
So that you can apply for a secured credit card from a bank, it is best to open an account with them which is particularly interlinked with the credit card you are about to make use of to rebuild your credit score. The account you might have opened ought to be deposited with revenue that’s straight associated to the offered credit limit of the secured credit card.
After obtaining a secured credit card, you could commence making use of it for the purchasing transactions but you must generally remember that you simply will need to never charge much more than it is possible to pay due to the fact carrying out so will only additional hurt your credit score. Also, mainly because of the nature of secured credit cards, the interest rates charged by the banks are higher than classic credit cards and the credit limit obtainable is lower since it really is dependent in your account’s deposit.
So as to get your credit score moving up, it is best to usually maintain your credit card balance beneath 30% of its credit limit and on a regular basis pay the balance as soon as the statement arrives every month. If you are productive in acquiring two secured credit cards, it is possible to repair your credit faster because there will be two accounts updated within the 3 significant credit reporting bureaus. After that, you should apply for the annual absolutely free credit report from the credit bureaus and check if your credit is positively progressing. If you will discover any erroneous entries, make sure you report it appropriate away for proper action of the authorities.
Right after rising your credit score considerably, the next step would be receiving a vehicle loan from a high risk credit provider. Obviously, you ought to only do this step should you can afford paying the monthly premiums and interests of the loan you acquire. You may also ask a buddy to cosign with you on the loan you are about to apply for but you have to make the payments important every month to avoid any mishaps together with your buddy. By receiving a high risk loan and paying it on a timely manner each month, the credit scoring method will add more plus points in your credit score.
Right after some time, you’ll be surprised that an unsecured credit card application form will arrive in your mail. This usually means that your credit repair efforts are going well and you are on your technique to reestablishing a powerful credit score. When your unsecured credit card has been approved, it is possible to begin using it just like the secured credit card. By keeping your balance below the 30% degree of your credit limit, you can further shoot up your credit score into greater heights and this would mean lower interest rates and pre-approval on the future loans, mortgages, and credit cards you apply for.
How to Improve Your Bad Credit Score
There is nothing good about bad credit. It is the exact opposite of good credit. While good credit helps you qualify for car and home mortgage loans, bad credit could keep you from being able to buy these large-dollar items. It can also keep you from qualifying for credit cards and may possibly hinder your ability to rent a house or apartment. It is very easy to end up with bad credit. Bad credit ratings happen when a person does not pay back money borrowed on time or when that person simply doesn’t pay it back at all. There are varying degrees of bad credit. A person is not automatically given a bad credit rating if he misses a payment or is late a time or two. However, if a person is continually late or he does not make a payment for several months, his credit rating can be affected and could possibly hurt him in the future. Credit ratings, even bad ones, can be improved and fixed. Depending on the situation, with responsible credit usage and prompt payments, bad credit can turn into good credit over time. The first step is to understand what your credit rating is by pulling your credit report. Credit reports are available through one of the three major U.S. credit bureaus: Experian, Equifax and TransUnion.
There may be many different reasons for your bad credit report history. A bad credit history can make it difficult for you to borrow money when you need to. Your credit history is a detailed history of all your debts and is tracked by credit ratings agencies in the US. Understanding how your credit history is compiled can help you to avoid situations which may result in you earning a bad credit report. Your history tells creditors things such as whether you pay your bills on time, how long you’ve used credit, if you’ve opened several credit card accounts in a brief time frame, and how much debt you have compared with your available credit limit. Credit scores are tools used by lenders to evaluate all this information and determine the risk that you will not be able to repay a debt as agreed. Although you can’t rewrite history, the passing of time can remove negative credit information from your report. Negative records such as collection accounts and charge-offs will remain on your credit report for 7 years after they are first posted, while bankruptcies stay on your record for 10 years. Paying off on a particular debt account before the end of its set term doesn’t remove it from your credit report, but will cause the account to be marked as ‘paid.’ It is still a good idea to pay your debts; it can improve your credit score. However the major improvement you will see to your credit score is when the particular record expires. Weak credit scores don’t necessarily mean you won’t obtain credit. You can get rid of bad credit habits, restore your positive credit history, improve your credit scores and use credit to your advantage.
Do you want to know how to enhance your credit scores? Having bad credit scores can affect your ability to leverage financial services or pursue job opportunities. Think of your credit score as a picture of your credit risk. This picture reflects your risk at a specific point in time. A picture does not change; however, when you take another one, you will probably look a little different. Similarly, an alteration to your credit information will result in a change to your score, reflecting updated information on your creditworthiness. However, a bad credit score can be improved with a little dedication and fortitude. The only true credit score quick-fixes are to pay down debt in time. Late payments, collections, and bankruptcies have the greatest negative effect on your credit score. It is advisable that you check your credit report regularly and take necessary steps to successfully dispute negative information on a credit report.
My Credit Score Goes Lower…when My Credit is Pulled! By:author Michael Malloy
My credit score goes lower..when my credit is pulled By Michael Malloy Does my credit score drop when my credit report is requested?
There are a number of misconceptions about how a credit score is determined and affected, including the idea that a person’s score automatically drops when a credit report is requested. The truth is that a credit score is determined by individual credit bureaus only after considering a laundry list of factors, such as payment history and the number of open accounts that a person has. The number of requests for a credit report, also known as inquiries, makes up only ten percent of the criteria for a credit score adjustment. Some credit experts say that credit scores can drop as much as five points when a credit report is requested, but others say this is more of a myth than reality.
“The credit report reads like a map, but the question is where is it leading you? Is it taking you down a path of rejections and denials, or is it leading you to a better quality of life – a new home, car, or college for your kids? Is it presenting the opportunity for a vacation or forming the foundation for a brand new business? Let’s get you on a GPS system for credit improvement and get you out of this mess once and for all!”
The Credit Physcian
There are two different types of credit report inquiries in the credit world: “soft” and “hard” inquiries. A soft credit inquiry occurs whenever a consumer requests his or her own credit card report from a bureau, or when a credit report is requested by a current creditor investigating a dispute. This type of credit inquiry is not supposed to have any effect on a consumer’s credit score since it was made at the request of the consumer himself or an established creditor. A hard inquiry, however, can lower a consumer’s credit score under certain conditions. A hard inquiry occurs when a credit report is requested by a lender considering a new loan or other parties who may have judgments or liens against the consumer. For example, when a credit report is requested by a court or the IRS, a potential lender may be more reluctant to offer the best interest rate or the maximum loan amount. Credit bureaus do understand that a number of hard inquiries connected with housing or car loan applications are not unusual, so when a credit report is requested by more than one lending company for the same purpose within days of each other, it is often counted as only one hard inquiry on the credit report.
Whenever an invitation for an unsolicited credit card arrives in the mail, there is always the possibility that the sender did make an inquiry into the consumer’s credit status. Fortunately, when a credit report is requested by an outside interest without the consent of the consumer, the inquiry is not usually counted against the consumer’s credit score. Inquiries are supposed to remain on a consumer’s credit report for up to two years, although many lenders are primarily interested in the number of inquiries made in the last six months. Applying for too many credit cards or store accounts in a short period of time can make a consumer look desperate in the eyes of lenders, especially if many of those requests have been turned down.
In short, when a credit report is requested by the consumer himself or in response to an existing situation with a creditor, there should be little to no effect on credit scores. If there are too many inquiries in a short amount of time, the credit bureau may see that as a negative and lower the consumer’s credit score several points. This adjustment may have little effect on a consumer’s ability to secure a loan or open a new account, but if the adjusted score falls below 600, the result could be higher interest rates or a lower line of available credit.
Things You do to Drop Your Credit Score !
Credit Score Mistakes ” common things to watch for
Follow these tips to avoid the common traps that can sink your credit risk rating:
Debts and credit you don’t use.
It is easy today to apply for a store credit card that you forget all about in three years – but that account will remain on your credit report and affect your credit score as long as it is open. Having credit lines and credit cards you don’t need makes you seem like a worse credit risk because you run the risk of “overextending” your credit.
Also, having lots of accounts you don’t use increases the odds that you will forget about an old account and stop making payments on it – resulting in a lowered credit score. Keep only your used accounts and make sure that all other accounts are closed. Having fewer accounts will make it easier for you to keep track of your debts and will increase the chances of you having a good credit score.
However, realize that when you close an account, the record of the closed account remains on your credit report and can affect your credit score for a while. In fact, closing unused credit accounts may actually cause your credit score to drop in the short term, as you will have higher credit balances spread out over a smaller overall credit account base.
For example, if your unused accounts amounted to $2000 and you owe $1000 on accounts that you have now (let’s say on two credit cards that total $2000) you have gone from using one fourth of your credit ($1000 owed on a possible $4000 you could have borrowed) to using one half of your credit (you owe $1000 from a possible $2000). This will actually cause your credit risk rating to drop. In the long term, though, not having extra temptation to charge and not having credit you don’t need can work for you.
” The credit physician says to look at your credit report every month,the most common error people make is not checking there report for mistakes and new items,like collections and charge offs,this will effect your score in a very negative way,and can drop that score very fast and can set you back months even years,if your not keeping your eyes on your credit report.”
Inquiries on your credit report.
Every time that someone looks at your credit report, the inquiry is noted. If you have a lot of inquiries on your report, it may appear that you are shopping for several loans at once – or that you have been rejected by lenders. Both make you appear a poor credit risk and may affect your credit score. This means that you should be careful about who looks at your credit report. If you are shopping for a loan, shop around within a short period of time, since inquiries made within a few days of each other will generally be lumped together and counted as one inquiry.
You can also cut down on the number of inquiries on your account by approaching lenders you have already researched and may be interested in doing business with – by researching first and approaching second you will likely have only a few lenders accessing your credit report at the same time, which can help save your credit score.
Online loan rate comparisons.
Online loan rate quotes are easy to get – type in some personal information and you can get a quote on your car loan, personal loan, student loan, or mortgage in seconds. This is free and convenient, leading many people to compare several companies at once in order to make sure that they get the best deal possible.
The problem is that since online quotes are a fairly recent phenomenon, credit bureaus count each such quote estimate as an “inquiry.” This means that if you compare too many companies online by asking for quotes, your credit score will fall due to too many “inquiries.”
This does not mean that you shouldn’t seek online quotes for loans – not at all. In fact, online loan quotes are a great resource that can help you get the very best rates on your next loan. What this information does mean, however, is that you should research companies and narrow down possible lenders to just a few before making inquiries. This will help ensure that the number of inquires on your credit report is small – and your credit rating will remain in good shape.
Thinking that you only have one credit report.
Most people speak of having a “credit score” when in fact most people have at least three or more scores – and these scores can vary widely. There are three major credit bureaus in the country that develop credit reports and calculate credit scores. There are also a number of smaller credit bureau companies.
Plus, some larger lenders calculate their own credit risk scores based on information in your credit report. When repairing your credit score, then, you should not focus on one number – at the very least, you need to contact the three major credit bureaus and work on repairing the three credit scores separately.
Written by: Michael Malloy The Credit Physician
” empowering you to take control of your credit”