YOUR CREDIT SCORE
“What exactly happens when a mortgage lender pulls my credit?”
When a lender pulls your credit score, it initiates a "hard inquiry" or "hard pull" on your credit report, which can temporarily lower your credit score by a few points. This type of inquiry occurs because the lender is assessing your creditworthiness to determine the risk of lending to you. Multiple hard inquiries within a short period, especially for the same type of loan (like a mortgage or car loan), are often treated as a single inquiry by credit scoring models if done within a specific time frame. Hard inquiries remain on your credit report for about two years, but their impact on your credit score diminishes over time.
“How do I improve my credit score?”
To improve your credit score, consistently pay your bills on time, as payment history is a significant factor in your score. Reduce your credit card balances to lower your credit utilization ratio, ideally keeping it below 30% of your credit limit. Avoid opening too many new credit accounts in a short period to minimize hard inquiries. Check your credit report regularly for errors and dispute any inaccuracies. Maintaining a mix of credit types, such as installment loans and revolving credit, and keeping older accounts open to lengthen your credit history can also positively impact your score.
Read more ways to improve your score here.
HOW ARE THE SCORED WEIGHTED
35% is established from your payment history, collections, and public records
30% is established from outstanding balances being carried on your accounts
15% is based on the length of your credit history. It is better to have credit for longer time frames so that a history is built upon
your record
10% is established around the type of credit you have
10% is established around your request for credit (credit inquiries), meaning that every time you apply for credit, your scores are impacted by certain FICO rules. You can, however, apply for as many mortgages and car loans as you want, as long as they are in a 14-day window. FICO allows this because they are big-ticket items
Auto and mortgage-related inquiries that occur within 30 days prior to scoring have no effect on the score
Outside of the 30 day period all auto and mortgage inquiries that occur within any 45 day period are treated as one inquiry
Federal Law allows one FREE credit report to consumers every
12 months from each credit reporting company.
Request your free credit report by visiting www.annualcreditreport.com
