Q & A about Credit Inquires
Q: To many recent inquires impacted my score. I need at least 50pts for 100% financing by October to buy a house. I'm currently at 532 FICO score. Please help!
Sandra
A: Hi Sandra,
From an interview with a credit expert at TransUnion in Fullerton, California who wouldn't give me his name, I was told that too many inquiries would not lower a credit score by more than 20 points. The way he explained the point deduction goes like this: 2 points for each inquiry up to three per month; then 5 points deduction for each inquiry thereafter for one year. Unless you "pause for six months, then you would go back down to 2 points deduction and build from there. First he said that your score couldn't lose more than 20 points and then he explained how you could.
Exceptions to this rule include a buffer zone when you shop for a real estate mortgage or auto loan within either a ten day or fourteen day period. (Even the "expert" didn't know how many days you get!)
Credit reporting agencies (CRAs) have many pages online for you to research. Some fact I gathered state:
* You get 14 days in a mortgage or auto loan buffer zone where inquires get grouped together.
* You get more deductions for fresh inquiries and those over six months go down in negative deductions. (No CRA stated how much each deduction counts.)
* CRAs say that potential creditors and lenders look at an applicant with too many inquiries as "desperate." The CRAs then say the lender has no way of knowing whether or not the loan was approved, which would mean that the borrower could owe more money than what is listed. However, if the CRAs don't care and blame it on the lenders, why do the credit agencies compute inquiries into your credit score? And, with the instant reporting, any new loans should show up on your report!
What you can do about inquiries:
Look at your inquiries and ignore reviews from the CRA, reviews you instigated, tenant screening, and reviews from your existing creditors. These "soft inquiries" don't count against you.
Find inquiries from lenders you don't recognize. Write a letter to them and ask them to remove the inquiry from your report.
Besides IRS inquiries (which imply that you have a pending lien or action against you), collection agency review inquiries impact your score the most. These extremely negative inquiries tend to stay on reports longer than the law allows (7 years). People ignore them because they mistakenly believe that since they are only inquires, they don't mean much.
Dispute Process
Dispute inquiries and ask for removal. Write to the creditor direct by a certified or registered letter.
Sample Letter:
Dear Sir or Madam:
I discovered an inquiry from your company in a recent review of my credit reports. I do not recall authorizing you to review my credit history or report. Based on the FCRA, I would like to be sent proof that I initiated or requested for you to review my credit. Please forward a copy of my written authorization. If you cannot send me written proof, please promptly remove the inquiry from my credit report (name which credit agency) and send me confirmation of your removal action.
Thank you for your timely reply. I need to provide housing for my family and I am sure you don't want to harm our efforts.
Sincerely,
Sandy Smith
If all you have are too many inquiries, your credit score should be higher than 532. Therefore I assume that you will be sending other letters to the CRAs to clear other negative items. That's why I suggest you take care of the inquires issues by contacting the companies directly.
We can tackle other issues next time.
Good luck getting your dream home!
Jeanette Fisher
P. S. Did you get the free ebook about Credit Tips for Mortgages at Real Estate Credit Help?
Sandra
A: Hi Sandra,
From an interview with a credit expert at TransUnion in Fullerton, California who wouldn't give me his name, I was told that too many inquiries would not lower a credit score by more than 20 points. The way he explained the point deduction goes like this: 2 points for each inquiry up to three per month; then 5 points deduction for each inquiry thereafter for one year. Unless you "pause for six months, then you would go back down to 2 points deduction and build from there. First he said that your score couldn't lose more than 20 points and then he explained how you could.
Exceptions to this rule include a buffer zone when you shop for a real estate mortgage or auto loan within either a ten day or fourteen day period. (Even the "expert" didn't know how many days you get!)
Credit reporting agencies (CRAs) have many pages online for you to research. Some fact I gathered state:
* You get 14 days in a mortgage or auto loan buffer zone where inquires get grouped together.
* You get more deductions for fresh inquiries and those over six months go down in negative deductions. (No CRA stated how much each deduction counts.)
* CRAs say that potential creditors and lenders look at an applicant with too many inquiries as "desperate." The CRAs then say the lender has no way of knowing whether or not the loan was approved, which would mean that the borrower could owe more money than what is listed. However, if the CRAs don't care and blame it on the lenders, why do the credit agencies compute inquiries into your credit score? And, with the instant reporting, any new loans should show up on your report!
What you can do about inquiries:
Look at your inquiries and ignore reviews from the CRA, reviews you instigated, tenant screening, and reviews from your existing creditors. These "soft inquiries" don't count against you.
Find inquiries from lenders you don't recognize. Write a letter to them and ask them to remove the inquiry from your report.
Besides IRS inquiries (which imply that you have a pending lien or action against you), collection agency review inquiries impact your score the most. These extremely negative inquiries tend to stay on reports longer than the law allows (7 years). People ignore them because they mistakenly believe that since they are only inquires, they don't mean much.
Dispute Process
Dispute inquiries and ask for removal. Write to the creditor direct by a certified or registered letter.
Sample Letter:
Dear Sir or Madam:
I discovered an inquiry from your company in a recent review of my credit reports. I do not recall authorizing you to review my credit history or report. Based on the FCRA, I would like to be sent proof that I initiated or requested for you to review my credit. Please forward a copy of my written authorization. If you cannot send me written proof, please promptly remove the inquiry from my credit report (name which credit agency) and send me confirmation of your removal action.
Thank you for your timely reply. I need to provide housing for my family and I am sure you don't want to harm our efforts.
Sincerely,
Sandy Smith
If all you have are too many inquiries, your credit score should be higher than 532. Therefore I assume that you will be sending other letters to the CRAs to clear other negative items. That's why I suggest you take care of the inquires issues by contacting the companies directly.
We can tackle other issues next time.
Good luck getting your dream home!
Jeanette Fisher
P. S. Did you get the free ebook about Credit Tips for Mortgages at Real Estate Credit Help?
posted by Jeanette at Monday, July 17, 2006
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