Credit Inquiries And How It Truly Affect Your Credit Score

"Don't let anyone run your credit each inquiry hurtspicture is needed. So how can you look around for a
your credit score!!" You hear it all the time. Well ifmortgage if every inquiry affects your score? You
you're looking for a mortgage how can you possiblyprobably can't. Well, here's the part that probably 99%
shop for a loan if you can't run your credit again???of the loan officers out there don't know. There's what
Credit inquiries are 10% of overall credit score, and it'sI like to call a 14-day rule. The 14-day rule says you can
the least understood of all credit scoring factors. Therehave an unlimited number of mortgage inquiries in 14
are actually 5 different categories that affect yourdays and it counts as one inquiry. That's right, unlimited.
credit score and they are as follows:So for example, you're looking around for a mortgage,
Credit History- Do you pay on time- 35%you decide go to fifty different mortgage companies.
Credit Balances vs available credit- 30%I'm not saying you should do that but, if you decided "I
Length/Depth of credit history- 15%want to shop fifty mortgage companies" and you had
Type of credit- Revolving, Installment,fifty different mortgage companies run your credit. If
Mortgage, etc. 10%they ran your credit in 14 days, that's one inquiry and
Credit Inquiries 10%that affects your score as one inquiry. If it happens to
Many loan officers, lenders, brokers use credit inquiriestake you 28 days to shop 50 mortgage companies,
to scare borrowers from shopping for their mortgage.which I would think it might take longer than that, but
It's a scare tactic, and what they'll say is "don't letassuming that you can go out and get 50 lenders to
anybody else run your credit, it'll hurt your score", andrun your credit and do whatever it is that needs to be
that's partially true but there are a few details that theydone in 28 days, that will count as two inquiries. Again,
leave out.this is really the most absolute misunderstood of all the
For starters inquiries could affect your score from 2factors in overall credit scoring.
points per inquiry to 25 points per inquiry. TheBanks, brokers and loan officers all use inquiries to
maximum number of inquiries you can have that willscare you from shopping for a loan, but they
affect your credit score in any six month period is ten.themselves don't even know the rules of how inquiries
So if you have ten inquiries in a ten month period, go towork. I'm not saying that shopping around is the
town, at that point you can have eleven, twelve orsmartest thing to do, you really need to work with a
even one hundred inquiries it doesn't matter it won'tprofessional mortgage planner. Certainly, if you're going
effect your score at all after ten.to shop around know the rules and make sure that
Now, here's the big one, mortgage and auto loanwhatever you do you get it in writing, you need to get
inquiries are completely different than credit carda Good Faith Estimate. You can't get that without a
inquiries. When you want to shop for a mortgage or aloan officer running your credit. So when a loan officer,
car loan, you want to make sure you get the best loana bank, or broker says don't let anybody run your
for your personal needs. The problem is, any reputablecredit it's going to hurt your score, you could answer,
mortgage professional needs to run your credit toyou know what, that's true but I know the 14-day rule. I
present a loan offer in writing. If you can't get a loanguarantee you whoever you're speaking to says,
offer in writing then it's not worth paper it's not written"What 14-day rule?" Again, remember, you can have
on.an unlimited number of inquiries for a mortgage loan in
So, to actually get an offer in writing to you a loan14 days and it counts as one starting from the first
officer needs to have your credit run. The credit scoreinquiry.
is only part of the picture, a whole credit history and