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17 Jun

Will Checking My Credit Lower My Beacon Score?

General

Posted by: Robert McCaw

The Beacon score or credit score determines the probability that you will pay your bills on time and in full. Beacon scores are sometimes referred to as FICO scores and both names are from the credit bureaus that developed the scoring. Keeping track of this important number is vital. Inquiries to your score are recorded and tracked on the credit report.

Credit Inquiries

Every time that you, allow a creditor or potential lender check your credit report, a record is created of the event. This record appears on the top of the credit report. There are two types of inquiries, soft and hard. A soft inquiry occurs when you pull your own credit report. Credit card companies also pull soft inquiries when marketing pre-approval offers. A hard inquiry happens when submitting loan or credit card applications. A hard inquiry is one that is triggered by the applicant; a lender cannot process a hard inquiry without your permission. There is a process to have non-authorized credit inquiries removed from your report.

Affects on Your Score

Soft inquires do not affect the credit score. A consumer can pull their own credit score as many times as they wish without repercussions. Hard inquires affect the score slightly. These inquires are included in the calculation done for credit scoring. Usually they account for 10% or less of the overall score. Multiple inquires that occur in a 14-day span are counted as just one inquiry. This helps those who are credit shopping (mortgages, personal loans etc…) and need to have their credit pulled several times. Multiple inquiries are rarely the reason that people are denied credit unless the score was borderline to start with.

Recording Inquiries

Recording the number of inquires a consumer has on the credit report allows potential lenders to see how often a consumer has applied for new credit. This can be a sign to someone facing credit difficulty. Too many inquiries could mean that a consumer is deeply in debt and is looking for loans or new credit cards to bail themselves out. Another reason for recording inquires is identity theft. Hard inquires not made by you could possibly be an identity thief opening accounts in your name.

Time Frame

Inquires are required to remain on the credit report for at least a year. Most creditors, however, disregard any that have been on the report for over six months. Hard inquires remain on the report for two years. Soft inquires only appear on the report that you request from the credit bureaus and will not be visible to potential creditors. Hard inquires appear on all credit reports. All inquires disappear from the report after two years.

Who Has Access

Only individuals with a specific business purpose can check your score. Creditors, lenders, employers and landlords are some examples of approved business people. The inquiry only appears on the credit report that was checked. For example, if a landlord uses Experian to check the creditworthiness of an applicant, the credit check will only appear on Experian’s report, not TransUnion or Equifax. To limit the number of soft inquires made on your credit report, contact the credit reporting agencies and request that they remove your name from marketing distribution lists.

Conclusion

Having a few inquiries in a period of a couple of weeks while determining whether to work with a specific Mortgage Broker will (in most cases) not have a negative impact on your credit score.  Certainly, it will not have a lasting impact.

Check your own score annually at least @ www.equifax.ca

Working with an independent Mortgage Broker typically results in one inquiry on your Bureau which the lender partners of that Broker will use.  Thus more than one ratehold can be placed with more than one lender without negative credit consequences via a Broker.  (this is sometimes done to address the possibility that a lender may not like the type of property you are considering, i.e. leasehold – then a Plan B is nice to have)