You work hard to pay your bills on time, save a bit of money and spend wisely. You keep tabs on your credit report, especially now that you're considering refinancing your mortgage. While you've heard about FICO scores, you don't know much about them -- other than that they're really important. Take a look at five things you probably didn't know about FICO scores, and get a better understanding of how it all works.
Different Types and Different Uses
There are a variety of scoring methods and different models for determining a credit score. Different types of lenders choose the model that best suits their needs for deciding whether you're creditworthy or not. The department store credit department may look at a different score than your local bank where you applied for a small loan. It's safe to say that if your score is high in one model, it's probably high in all of them.
Your Personal Information Stays Personal
The only information that's used in figuring out your credit score comes from payment histories, number of open and closed accounts, the length of your credit history, the amount of debt you carry and other financial records. Your age, gender and marital status are not a factor. Salary, occupation and employment history aren't part of your credit score either.
Not Just Anyone Can See Your Score
The Fair Credit Reporting Act only allows businesses and entities with a "permissible purpose" to access your credit score. These include:
- Institutions where you apply for credit
- Collection agencies
- Insurance companies
Everyone else needs your written permission, including companies who require a credit check for employment.
Credit Scores Aren't Free
Once a year, you can request your credit report for free from the three major credit reporting agencies: Experian, TransUnion and Equifax. The easiest way to do this is to go to www.annualcreditreport.com and request all three. The reports are free, but your credit score isn't. Each agency sets its own fee for access to your score. You can use a free service like Credit Karma to get an estimate of your credit score but this score is not recognized by banks and lenders as an "official" score.
Applying for Multiple Mortgages Won't Hurt Your Credit Score
It's common for homeowners to shop around for the best rates when refinancing their mortgage. If you decide to apply for a mortgage through any particular lender they'll need to pull your credit. What many homeowners forget is that you can go to another lender and submit an application and when they pull your credit it will not impact your credit score.
The credit bureaus are not around to penalize people for wanting to get the best mortgage rate. They can see that you are applying for one mortgage so the only credit pull that impacts your score is the first one. Any credit pulls done within 30 to 45 days after the first one will not impact your credit score. This ensures that all the lenders you apply with see an accurate score. If your credit score got dinged every time you applied for a mortgage during that 30-day period your score would look significantly worse to the last lender you submitted an application to.
When you apply at Lenda we provide a fee credit check to speed up the process and help you lock in your rate faster. We know rates are low and we want you to enjoy a quick close. Get started today!