The Myths of Credit Scores

Does having my credit check hurt my score?

If your [FICO Scores] change, they probably won’t drop much. If you apply for several credit cards within a short period of time, multiple inquiries will appear on your report. Looking for new credit can equate with higher risk, but most credit scores are not affected by multiple inquiries from auto, mortgage or student loan lenders within a short period of time. Typically, these are treated as a single inquiry and will have little impact on your credit scores.

Does having my credit checked by more than one lender hurt my score?

Looking for a mortgage, auto or student loan may cause multiple lenders to request your credit report, even though you are only looking for one loan. To compensate for this, FICO Scores ignore mortgage, auto, and student loan inquiries made in the 30 days prior to scoring. So, if you find a loan within 30 days, the inquiries won’t affect your scores while you’re rate shopping. In addition, FICO Scores look on your credit report for mortgage, auto, and student loan inquiries older than 30 days. If your FICO Scores find some, your scores will consider inquiries that fall in a typical shopping period as just one inquiry. For FICO Scores calculated from older versions of the scoring formula, this shopping period is any 14-day span. For FICO Scores calculated from the newest versions of the scoring formula, this shopping period is any 45-day span. Each lender chooses which version of the FICO scoring formula it wants the credit reporting agency to use to calculate your FICO Scores.

After my credit is checked, why is the lender telling me that the score is different than what I see from my credit card company, bank, or credit karma

These companies are showing scores that are calculated for short term lending purposes like credit cards and auto loans. The credit bureaus use a different scoring model to provide credit scores for a mortgage. Although it gives you an idea of your score, most of the times your credit score used for mortgage approval is going to be different.

How do I increase my credit score?

• Pay bills on time.
• Keep balances low on credit cards and other revolving credit products.
• Apply for and open new credit accounts only as needed.