Every once in a while, I get the question:
How do loan inquiries impact my credit score?
The good news is that there are new laws that allow consumers to rate shop for credit cards and other type of loans without taking a hit on their credit scores.
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The new inquiry timetable looks at what are considered “like” inquiries.
For example, a consumer can shop for multiple auto loans within a 45-day period. No matter how many auto dealers the consumer visits, the inquiries are all auto loans, and are therefore considered “like” inquiries. If a consumer shops for multiple auto loans within a 45-day period, their actions will appear as only one inquiry on the credit report, no matter how many auto loans they actually applied for.
This also holds true for mortgage loans, credit card offers and other extensions of credit. As long as the inquiries are considered similar, only one inquiry will appear on the credit report within an isolated 45-day period.
However, if a consumer shops for a mortgage loan, an auto loan, and a credit card within in 45 days, this will appear as three inquiries on the credit report. The reason for this is because the consumer has shopped for three different categories of “like” loans or credit offers.
In addition, a 30-day provision has been added for mortgage loans and auto loans. If your borrower shops for a mortgage loan within a 30-day period, they will NOT receive an inquiry on their credit report. The same holds true for an auto loan. However, as soon as they go beyond the 30-day period, they are now in the 45-day provision, and all inquiries will count as one.
Remember, if you’re looking to purchase a home, or refinance your existing mortgage, I’m here to help! Feel free to email, or call me anytime.
— Written September 20, 2014