Good News For Mortgage Shoppers!

A recent article from Bankrate.com, (11 Credit Report Myths), discussed myths associated with credit reports.  Since I’m in real estate is my business, I thought buyers who are shopping for mortgages would like to read this article and in particular the myth #4.

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4. Too many inquiries hurt my score.
Once upon a time, this statement was true. But get with the times — in this millennium, the credit agencies recognize a shopping mind-set when they see one. If a batch of mortgage or car loan inquiries arrives within 30 days, it doesn’t count at all, Watts says.

“Outside that 30-day period, if we locate a mortgage or car inquiry that occurred 180 days ago, and then see more mortgage- or auto-related hits in the accompanying 14-day window, we err on the consumer’s side and still assume she’s shopping for one item,” he says.

“We really feel like we are capturing the true consumer experience and not holding it against them for being an aggressive or smart rate shopper.”

Furthermore, there’s no such thing as some fixed number of points associated with these inquiries, Watts says.

“Inevitably when a consumer or a lender evaluates a credit file, they think this item must be worth 20 points, this is worth 100 points,” he says. “In reality we design the FICO scoring model so that each credit report item is given a reasonable or statistically valid number of points.”

In English, that means credit scores are designed to predict the likelihood that you’ll fall seriously behind in repaying one of your creditors within the next two years. Some things have predictive value and some don’t. Inquiries fall in the middle.

“They’re not incredibly predictive, so they’re in the model but they don’t drive the boat,” Watts says.

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To read more click here.

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