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Will Brokers and Lenders Running My Credit Affect My Credit Score When I am Shopping for a Home Equity Loan?
The myFICO.com Web site explains it this way: Looking for a mortgage or an auto loan may cause multiple lenders to request your credit report, even though you're only looking for one loan. To compensate for this, the score ignores all mortgage and auto inquiries made in the 30 days prior to scoring. So, if you find a loan within 30 days, the inquiries won't affect your score while you're rate shopping. In addition, the score looks at your credit report for auto or mortgage inquiries older than 30 days. If it finds some, it counts all those inquiries that fall in a typical shopping period as just one inquiry when determining your score.
That doesn't leave you much room to shop, does it? However, there are ways around it. Before you even start talking to lenders, you should get a copy of your credit report from each of the three main credit reporting agencies:
Equifax: (800) 685-1111 - www.equifax.com
Experian (formerly TRW): (888) EXPERIAN (397-3742) - www.experian.com
Trans Union: (800) 916-8800 - www.transunion.com
It generally costs about $9 per report. However, there is a federal law that allows you to get a free credit report from EACH of these agencies. It's called the Fair and Accurate Credit Transaction Act of 2003 (FACTA or FACT Act). There is only one place authorized by the credit bureaus to get your free credit reports under this Act--AnnualCreditReport.com. To request your reports over the web, go to https://www.annualcreditreport.com/cra/index.jsp. To request them over the phone, call 1-877-322-8228.
Once you get your reports, review them for accuracy. According to Equifax, it's possible for incorrect, incomplete or outdated information to appear on your credit report. If it does, it can drastically lower your chances of getting the loans, credit cards, and other credit products you deserve. Then, go to myfico.com/12 to order your FICO scores. This gives not only your scores, but also the negative credit codes that lenders see when making lending decisions.
Armed this information, you can avoid a lot of inquiries from appearing on your reports. When speaking with lenders, give them the information off your FICO scores, including the codes. Then, offer to fax or mail a copy of this information to help the lender determine if it's possible for them to work with you. Depending on your scores, it could also serve as a powerful bargaining chip when negotiating with lenders. Once you've narrowed your search to 2 or 3, have your credit run during this 30-day window of time.
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