Multiple Credit Inquires…do they count?

Bank Approval

The media, newspapers, internet are full of information, but sadly, much of the information concerning credit is inaccurate.   Please enjoy this article provided by: 

Sal Bonanno
Prime National, Inc.
Main: 855.278.3578
Direct: 646.283.2783

Let’s check out some common credit myths:

Credit Myth: “Multiple credit inquiries will hurt your score, each and every time.”  In older FCRA models, inquiries (sometimes referred to as “pulls”) had a greater effect on your score because they counted every inquiry for automotive and every inquiry for mortgage.  So if you were shopping around for the best deal on an auto loan, or shopping around for the best deal on a mortgage, your credit score got dinged for each one. Anyone can see this is absurd, and only serves to penalize smart shoppers, which is really the last thing the CREDIT industry should want, right?

The FCRA models realized that this was discouraging savvy consumers from getting the best deal, so they adjusted the model to only count automotive and mortgage inquiries that are done within a certain period of time to be counted as one single inquiry. 

Therefore someone can shop as much as they want for a car or for a mortgage within a thirty-day period of time, and it only counts as one inquiry.  Saying that is based on what FCRA has revealed.  However, in practice, we’ve seen things play out a bit differently.  We’ve actually seen some occasions where your score is affected instantly based on multiple automotive scores, but it’s difficult to pinpoint without doing a side-by-side, line-by-line check of exactly when it happened.  But overall, what FCRA has disclosed is that multiple pulls, created by comparison shopping, generally only counts as one inquiry.

 Credit Myth: “It will take you seven years to improve your credit.” This is another widespread misconception you will surely deal with at least once in your first year of business.

 In actuality it’s an ongoing process to improve your credit.  It doesn’t take a certain amount of time.  Most negative items will remain on your credit report for up to seven years, as long as they are accurate, verifiable, and actually occurred within that period of time.  Of course, many items are NOT accurately reported, and are not verifiable, therefore they can be removed.

Regardless of whether or not individual line items can be corrected or deleted, though, you can start to improve your credit by maintaining a positive payment history, maintaining lower balances and low utilization rates on your credit cards, and establishing new accounts to get your new payment history going smoothly again.

 Credit Myth:  “A serious financial crisis like as a foreclosure or bankruptcy permanently hurts your credit score.”  Foreclosures will remain on your credit report for seven years, and this is quite likely the origin behind Credit Myth #9. Bankruptcies can linger for seven to ten years: this is entirely dependent upon how the bankruptcy gets filed. A Chapter 13 will remain for seven years, whereas a Chapter 7 will remain for a decade.  Note, however, that the actual bankruptcy in the public records section will remain there for ten years either way.

 The important take-away point is that although these are certainly long periods of time, it’s not permanent, and there are many things you can do after a financial crisis to reestablish your credit and get your credit back on track.

Reprinted with approval.

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