How Many Points Does a Mortgage Inquiry Affect Your Credit Score

How Many Points Does A Mortgage Inquiry Affect Your Credit Score

You’re looking into a mortgage so that you can buy a home. Congratulations! You’ve worked up until this point making sure that your credit is what it needs to be to get a loan, but now you’re worried that shopping around may decrease your score and you’re wondering how many points a mortgage inquiry will affect your score.

It is true that hard inquiries will decrease your score, but you can rest easy knowing the impact will largely be marginal. In today’s post, you’ll learn everything you need to know about mortgage inquiries. Spoiler alert: There’s not much to worry about.

1. Time Frame

Contrary to popular belief, the credit system is not trying to work against you. They understand that shopping around for the best rate is in your best interest, and they aren’t looking to punish you for that. For that reason, inquiries into loans like mortgages and automobiles made within a certain time frame (anywhere from 2 to 6 weeks) will actually count as one inquiry.

So, applying for many loan quotes will not hurt your credit as long as you do it fast. And that will save you time and money in the long run!

2. 30-Day Delay

Chances are, if you’re actually putting in hard inquiries, you are ready to buy soon.

Great news…

There is a 30-day delay between when the mortgage loan is quoted and when it actually hits your credit report. So, those home loans you are applying for aren’t even visible to lenders.

This means that they aren’t seeing the multiple applications you sent in. No reason to worry about lenders subjectively declining you either. They won’t even be able to see it until 30 days after it’s all said and done.

3. How Much Does An Inquiry Affect a Score Anyway?

As with most things credit, it depends. There are many factors and the more storied your credit history, the less any single change will affect it at all. Generally though, even with newer or more sparse histories, a single inquiry wouldn’t be much at all, maybe five to ten points.

Since credit card inquiries do not get lumped together into one, applying for multiple credit cards in any time period would continue to affect your score and the amount of damage it does would compound with each new inquiry.

But with mortgage inquiries, you won’t have this problem. And you should see very minimal damage to your perfectly polished credit score.

Conclusion

You’ve worked hard to get yourself into the position you’re in. Buying a house is an exciting step and you don’t need that feeling to be weighed down by additional worry about every factor of applying for your loan or a few credit points.

Shop around if you’d like and find that loan that works best for your individual needs.

In fact, this is likely to increase your score in the long run, because you won’t find yourself in a loan that you cannot repay because you took the first one offered to you.

Let the experts at Go Clean Credit help you increase your score by more than 200 points! Our credit repair programs put you back on the path to financial success.  Contact Go Clean Credit today!

Credit Score of 524: Loans, Improvement Tips & More

Having a credit score of 524 means that you have some work to do. Ranked squarely in the lowest tier of scores, you are facing elevated interest rates on any loans and credit you are able to obtain—or rejection from them all together.

There is confusion on how credit scores actually affect car and home loans and credit cards. Will the interest rates be too high for me? Will I just be rejected? Luckily, it’s all answered below.

1. Home Loans

For a first time home buyer with a credit score of 524, you will most definitely be fighting an uphill battle. The majority of loans will reject you outright as your score is lower than their usual threshold of 620 by almost 100 points.

If you do find a loan that is willing to take you, the lower your score, the more that your interest rate skyrockets. With a score that low, the amount of interest you pay on the house could be upwards of half the principal loan, a lofty price to pay for poor credit.

Increasing your score is going to be your best bet to getting a decent home loan. It may take a couple years to fix and it will be frustrating, but even 100 more points on your credit score can improve your chances drastically and knock an interest percentage upwards of 2%!

2. Auto Loans

Car loans are similar in terms of interest rates and possible rejection through conventional means, but a car loan will be at least easier to find. The rates may once again be too high for you to consider this a viable choice, though.

Using the average $27,000 dollars for a car loan and a 60-month loan, a score of 524 could land you an average APR of upwards of nearly 16% and an interest over the life of loan of nearly $12,000 extra dollars!

Once again, it is in your best interest to improve your score or you may fall victim to predatory lending.

3. Credit Cards

Credit cards are not going to be easy to come by, either. This is the unfortunate fact of having a low score. Honestly, obtaining an unsecured credit card will probably be impossible. However, unsecured credit cards, or ones where you must make a deposit to obtain, will be beneficial to improving your score.

Your score may even jump by opening the card. And if you pay off your debt on time every month, the number will continue to climb.

So What To Do?

You will need to improve your score to be put into a more comfortable position. You may be able to get loans, but the interest rates will be high and could nearly double your loan… Start with a secured credit card and work your way up and pay on time every month. You’ll be glad you did.

Let the experts at Go Clean Credit help you increase your score by more than 200 points! Our credit repair programs put you back on the path to financial success.  Contact Go Clean Credit today!

Credit Score of 578: What It Means For Your Life

Credit Score of 578: What It Means For Your Life

So your credit score is 578 – is that good or bad? What does a credit score of 578 say about you? Your credit score reflects your ability to fulfill fiscal responsibility. The lower your credit score is, the larger your risk of having to make a big deposit before making home and auto purchases.

A credit score of 578 falls under the “Poor” FICO category. Scores below 619 often receive the most severe interest rates and terms on credit and loans. The effects can damage a person’s pursuit of happiness. You want to improve your credit score so that you are paying less for borrowing money.

What does having a credit score of 578 mean for home loans, car loans, and credit cards? How do you improve a 578 credit score?

Credit Score of 578: Home Loans

Is it possible?

PROBABLY NOT — For most mortgages, you need to be above a 620 credit score.

Generally speaking, with a score under 578, you may not qualify for mortgages with many lenders. If you do, you should anticipate interest rates ranging from 5-6%. There are a few loans out there, such as those administered by the Federal Housing Administration (“FHA loans”). However, it can still be tough.

The frustration gets real when it comes to housing loans.

Credit Score of 578: Car Loans

Is it possible?

YES — buying a car with a credit score of 578 is still possible, but the interest rate can be pretty high. People with bad credit are always offered higher interest rates than someone with a score only 70 points higher.

The average amount borrowed by auto buyers in 2018 has risen to a record high of $31,099. Here are the cost differences for 3 common types of auto loans accessible in myFICO’s loan savings calculator — 36-month, 48-month, and 60-month new auto loans — between someone with a credit score of 578 and someone with a score of 648.

Loan Type Credit Score Annual Rate Monthly Payment Total Added Cost
36-month new auto 578 15.867% $1,091 $2,986
648 10.334% $1,008
48-month new auto 578 15.865% $879 $4,080
648 10.364% $794
60-month new auto 578 15.938% $755 $5,266
648 10.438% $667

 

Can you believe that a 70-point difference in credit scores results in a difference of $5,266 in auto payment? Don’t let your wallet bleed. If your score changed to a 648 — just a 70-point improvement — you would save thousands of dollars.

Credit Score of 578: Credit Cards

What’s the best credit card for a score of 578?

OPTIONS ARE OUT THERE — If your credit score is a 578, you are only a little short of an average score. It is possible to qualify for an unsecured or secured credit card.

Here are a few recommendations:

Card Name Annual Rate Annual Fee Secured/Unsecured
Credit One Bank Visa 17.49% – 25.49% (Variable) $99 Unsecured
Milestone Gold Mastercard 23.90% $35-$99 Unsecured
Open Sky Secured Visa 18.64% (Variable) $35 Secured
Discover it® Secured Card 24.49% (Variable) $0 Secured

 

How To Improve A Credit Score of 565

There are many reasons to get started, and there are simple ways to go about it.

  1. Be smart when shopping for a loan. Applying for several loans or credit cards in a row can drastically hurt your score. If you pace out your loan shopping in a three-week period, for example, there’s a good chance it won’t count against you.
  2. Pay back your credit on time. Your credit score reflects how well you handle your money and how likely you are to repay a creditor, on time and within terms. Let your credit score communicate your reliability.

You can do it!

Let the experts at Go Clean Credit help you increase your score by more than 200 points! Our credit repair programs put you back on the path to financial success.  Contact Go Clean Credit today!

How Long Do Negative Items Stay on Your Credit Report?

So, you’ve gotten hit with a negative item on your credit report. Now you’re asking yourself, How long do negative items stay on your credit report? Worst case scenario? Negative items stay on your credit report for 7 years!

In today’s post, we’ll outline some different types of negative items and how long they stay on your report. It’s important to get these things removed if you can, but if that’s not possible, at least now you’ll know what to expect.

1. Late Payments

If you’ve been missing your payments regularly and have been more than 30 days later on some of them, you’ll experience negative hits on your credit score.

Falling behind on your bills is never a good idea. Delinquencies stay on your credit report for 7 years and can have a stronger impact if left unnoticed.

Make payments as quickly as possible, so that you can get back on track. Contact the credit bureaus and consult with them to take care of any leftover items. The negative items on your report will wear off over time, but you will have to explain your case clearly.

Late payments happen to even the most responsible borrowers. Try to work with your lender, explain the situation and see if there’s anything they can do to forgive your late payments.

2. Taking on Too Much Credit

This is a common problem that many people have gone through. We take on too much credit and can’t make the payments on them. A high-credit utilization alert can really start to sting after 30 days of non-payment.

If you have too many credit cards, loans, or payments to make then cutting them down is a good idea. It’s smart to use less than 30% of your credit limit. Don’t cross the limit over, as the compounding effects may derail your credit score.

Credit utilization is all about the balance on your accounts. So, as an example, if your only credit is a $1,000 credit card, make sure to keep the balance below $300 at all times.

3. Charge-Offs

Account charge-offs are a strong indicator of bad borrowing practices. If you don’t pay the owed amount in full as a part of your installments, then you might see a negative hit on your score.

Your lender may eventually give up after a few months of disorganized payments.

The charge-offs can stay for many years if left unnoticed. They can have a strong impact even if you’re practicing good creditworthiness years later. That’s why it’s important to clear out these negative hits early on.

Hire the Right Partners

Hiring the right consultants is the best way to ensure that you’re back on track.

Starting at just $99 a month, Go Clean customers can get access to a variety of credit related services. Whatever your needs or challenges, Go Clean is there for you.

Let the experts at Go Clean Credit help you increase your credit score by more than 200 points! Our credit repair programs put you back on the path to financial success.  Contact Go Clean Credit today!

What is Credit Utilization and Why Does it Matter?

What is Credit Utilization and Why Does it Matter?

Credit utilization is an important part of the credit score maintenance cycle. You want to make sure that you’re not shooting too high and using too much credit.

What is credit utilization?

Credit utilization is a simple ration that captures how much credit you’re using. E.g. if your limit on a single card is $5000, and you’re using $4500 of that your credit utilization is 90%.

This is bad news.

Your credit utilization should be around 30% if you want to maintain a good score.

You don’t want to borrow money, simply because it’s available. It’s important to be frugal in your investments and only take credit when necessary. You shouldn’t overspend and consume too much debt in one go.

Why does credit utilization matter?

A high credit utilization score tells the lenders that you’re burning too much cash on a single loan. Even though it within your rights to accrue that debt, you want to be under the limit at all times.

This is because if you’re late on your payments or have a missed payment in one month, your collective impact on your score will be incremental.

Credit utilization is usually calculated on your outstanding balances, so you should avoid going over 30%. Don’t reach your max limit as a general rule. There are however steps that you can take to ensure that you don’t go over your credit utilization limit.

Raising your credit limit

If you’re spending through about $3000 a month on your payments, and your credit limit is set at $5000, then you may be utilizing too much of it. You can request the financial institution involved to boost your credit limit to $10,000.

This may involve a hard inquiry which may reduce your score a little bit. But in the long-term, your credit score will increase as you’re not utilizing your complete line of credit.

The timing of credit bureau reporting

In general, most credit card companies report your balances and payments every month. If you can find out the exact date when they report it, you can pay off your balances on time. This will make the credit bureau think that you always have a positive balance.

Therefore, you should try to pay off as much as possible early on. This will also help establish a higher credit score after you’ve paid off your balance.

Setup alerts and pay mid-cycle

The best way to ensure that you’re not taking too much credit is to set up alerts from your lenders. Most automated systems can send you a text or email if you’re going above a certain limit. You can keep a track of your limits and ensure you’re not taking on too much credit.

You can pay off your monthly payments in the middle of the cycle. This is so that when your balance is reported each month, you can appear to be balance positive. This will help you establish a great credit score over time.

Let the experts at Go Clean Credit help you increase your score by more than 200 points! Our credit repair programs put you back on the path to financial success.  Contact Go Clean Credit today!

Does Freezing Your Credit Hurt Your Credit Score?

does freezing your credit affect your score

So, you’ve heard a bit about ways to protect yourself from identity theft. The research left you with the question, Does freezing your credit hurt your credit score?  The simple answer is no.

In today’s article, we’re going to explain what a credit freeze does and does not do, and why it shouldn’t affect your credit at all.

What Exactly is a Credit Freeze?

A credit freeze protects you against identity fraud and gives a simple way to control your assets and debt. Basically, it’s a security freeze that keeps identity thieves away from your account and has no impact on your credit score.  However, a credit freeze may keep you from being approved for a new card or loan.   It can also keep you from checking your FICO scores, as well as any credit file you may have. In other words, you don’t get access to them anymore.

When Should You Freeze Your Credit?

It’s a security measure that should only be executed when you suspect some wrongdoing. A couple of examples include:

  • If you think that someone might have stolen your identity.
  • If you received a number of unauthorized alerts on your card.

It’s a good idea to freeze your credit so that you can maintain your score and not have it reflect while you’re clarifying the misunderstanding with the banks.

You want to keep your credit profile as clean as possible. It proves you’re a trustworthy borrower and enables you to access lines of credit when you need them most. So, better safe than sorry; if you’re concerned about thieves, freeze your credit.

The Limitations and Reach of Credit Freezing

A credit freeze won’t affect any activity from a credit monitoring company or demote pre-screened offers of credit. That’s why it doesn’t have much of an impact on your everyday credit-focused activities.

You can still use your existing credit cards and continue using them normally.

Unfortunately, everything comes with a price. When you freeze your credit, you’ll face a few limitations. Most importantly, you won’t be able to open any new lines of credit.  Also, you can’t use your name to inquire about your credit, and you can’t submit any new credit applications.  This also means lenders won’t be able to check your credit because your credit is frozen.

Can I Still Use My Cards?

Some people hear the freeze and get afraid that they won’t be able to use their accounts. While that’s a valid concern, there’s nothing to worry about. You’re simply freezing any credit checks, and any new credit being opened in your name.

If you suspect that your credit card has been stolen, then freezing your credit won’t prevent the thieves from using your card.

In this case, you need to take action with your banks directly.  You can still carry out your loan and credit card payments as usual and report your activity to credit bureaus. There are no problems that arise there.

We hope this blog helped you resolve the question “does freezing your credit hurt your credit score?” If you have any questions, the experts at Go Clean Credit have an answer for you. Our experts can be reached at 1-866-991-4885.

How to Increase Credit Score by 200 Points

Having a low credit score can be detrimental to your financial health. Getting a loan, buying a car or a house can become more difficult if you don’t have good credit. You can increase credit score by 200 points or more if you follow the long-term strategies highlighted below.

Obtain a Copy of Your Credit Report

This is one of the most important steps when trying to increase credit score by 200 points. Obtain a comprehensive credit report for your account so you can have the data to conduct a deep dive into what’s hurting your score.

A 3-in-1 report is one of the most popular credit score reports that shows you your FICO score between a range of 300 and 850. Ideally, you want to keep your score above 700, as anything under 500 indicates that you’re not a trustworthy borrower.

Lenders like banks and credit card companies may not offer you favorable rates, and might even reject your application.

Look Out For Inaccurate Details in the Report

You need to find and fix the holes that make up your score. Many people find inaccuracies and mistakes when they evaluate their comprehensive report. Draft a letter to the agencies, or schedule an in-person meeting with a consultant who can help you resolve your errors.

If gone unnoticed for too long, your credit score may drop even more! That’s why it’s important to challenge erroneous information on your credit report and take action now.

Work With a Credit Score Consultant

A credit score consultant like Go Clean Credit can help you figure out what steps you need to take in order to increase your score. These could include restructuring your debt, making payments on time, or managing your savings vs. expenses on your account.

Consultants provide customized insights to help with your individual case. They can increase credit score by 200 points over time and provide real-world strategies that work.

Pay Off Your Debts on Time

Before taking on more debt, you should pay off your existing ones and make all payments on time. Frequently delayed payments can burn a hole right through your credit score. If you don’t fix this now, this could prevent you from obtaining a good rate on your next loan.

Paying off your credit cards, loans, car payments, etc. on time is the best way to increase your score significantly.

Get a Credit Booster Card

This is a smart way to boost your score long term. Get a credit card on your account and start making smaller monthly payments on it. Some good examples include things like rent, electric bills, etc. that can be paid monthly without much hassle.

You may not qualify for a regular card with a low score. However, you can easily obtain a prepaid credit card if you’re willing to make a small financial investment.

Let the experts at Go Clean Credit help you increase your score by more than 200 points! Our credit repair programs puts you back on the path to financial success.  Contact Go Clean Credit today!

How Much Does a Missed Payment Affect Credit Score?

How much does a missed payment affect credit score?

A missed payment as a one-time affair won’t destroy your credit. In fact, most places would consider it a normal part of your credit history. However, if you have a history of missed payments, it could cause real trouble for your score.

No one wants to ignore their financial responsibilities, but life happens. Unemployment throws off your income, unexpected emergencies tap into your savings… The list could go on and on.

The truth is, it doesn’t matter much whether you miss payments several times in a row, or in dispersed accounts over time. Too much of them will indicate that you’re an unreliable and inconsistent investment―not exactly the type of reputation you want while seeking access to more credit.

Financial institutions use your credit history to determine whether you’re a risky investment or not. If you can’t keep up with simple payments on the things you already owe, why would someone give you even more money?

The real question is, how much does a missed payment affect credit score?

A Tip To Prevent Missing Payments

It’s easy to think that someone offering you a line of credit is the same thing as someone giving you money. It’s really not. In fact, whether it’s credit cards or a loan, these types of things are financial obligations. Not gifts.

That’s why it’s important to contemplate the financial load of any credit card you’re taking into consideration.

If you aren’t ready for the burden, you’ll inevitably fall behind on payments. This becomes a vicious cycle that could put you in a bad situation.

Everyone Falls on Bad Times

Everyone knows that unexpected financial emergencies happen. You could fall into a health crisis, you may lose your job, or there might be a home improvement emergency at home.

But bad times aren’t a reason to shirk your financial obligations.

If you miss a payment on one or more of your credit lines, lenders will see you as a risky prospect. They may stop issuing you a loan or increase the rate if it hasn’t been locked in yet.

So, How Many Times is TOO Many?

Honestly, even one time is too many. If you have been more than 30 days late on your payment, your creditor may report it to the credit reporting agencies (CRA). After it is reported, it will show up on your credit report.

When it comes to FICO, a late payment will be evaluated on the basis of ‘how late’ it was. If you were 30 days late, it may not be that big of a deal. But anything more than that can add up incrementally. The problem gets exponentially worse the more you delay it.

According to FICO data, a 30-day late payment can cause a 90 to 100-point drop on a score of a consumer who’s leading around 780. This is why it’s so important to make payments on time so that your score can be ahead of the curve.

For someone who’s hovering at a 680, a 90-day credit card account could see a dip of 80 points if they’ve been late and hit with back to back delinquency issuances.

Late payments do add up over time, but it depends on the case. Don’t take someone’s advice on the matter and take it from the experts.  Contact us today if you’d like support repairing your credit score.

Tax Relief: Cancelled Debt and Mortgage Forgiveness Extension 2018

By now, you’ve probably heard of the Cancelled Debt and Mortgage Forgiveness extension, a new tax bill passed by Congress in February. This tax rule provides relief to those who have faced foreclosure or canceled debts.

Essentially, it means you can exclude that ‘income’ from being taxed.

Canceled Debt Income

When a lender forgives or cancels your debt, the IRS considers it income. As such, it’s taxed as income. This can put prior homeowners in a precarious financial situation.

“Generally, if a debt you owe is canceled or forgiven, other than as a gift or bequest, you must include the canceled amount in your income.” (source)

When you accept money which you were required to repay to an institution, the law says that you kept the money instead of repaying.  

So, you owe taxes. Even if you never had the money on hand.

That taxable income needs to be disclosed in your tax filing. Since the income goes to your household, you have to withhold the appropriate amount of taxes.

The IRS is clear about the rule – you must include the canceled amount in your income.

How to report it?

Lenders must report this act of debt forgiveness to the IRS by filling out form 1099-C. This alerts the government of the income, which will hold the taxpayer responsible for it.

It notes your debt has been waived and should be included in the filing of the taxes at the end of the year. You would enter it as “other income” in line 21 of form 1040, to be exact.

Mortgage Restructuring & Foreclosures

For people who experienced foreclosures or mortgage restructuring from 2007 to December 2016, this extension is for you.

According to the Cancelled Debt and Mortgage Debt Relief Act, you don’t have to report the forgiven debt to the IRS. So, that means you also get a pass on paying the income tax bill you’d normally receive for such income.

What is it all about?

It was first issued in 2007 and scheduled to sunset on January 1, 2018. Thankfully, Bill H.R. 2543 was introduced to Congress in May to extend it through 2018. Now, anyone who faced mortgage restructurings or foreclosures prior to January 1, 2017, can qualify for the extension.

It’s an interesting move in the ongoing efforts of Congress to ensure proper taxation.

If you qualified before that date and didn’t take the opportunity at hand, you may have little time left over to file an amended tax return. You have about 3 years from the date you filed a return to amend it, so you might be able to take advantage of that now.

The Act allows taxpayers to exclude about $2 Million of debt forgiven or canceled by mortgage lenders on their main home.

You can claim it now by filling out the form IRS 982 with your amended tax return.

If you need more assistance, contact us today. We’d be happy to answer any questions you may have, and help you strengthen your financial situation.

What is a Credit Builder Loan – 3 Things to Watch For

So, you’ve been researching ways to repair bad credit. Along the way, you’ve heard of several different tactics. Perhaps you’ve even tried a few of them. But now you need something more efficient, which leaves you with a pressing question: “what is a credit builder loan, anyway?”

Well, when done through a reputable company, a credit builder loan is an effective way to rebuild your credit. It’s a simple loan. You won’t find it widely advertised or even offered by smaller financial companies such as credit unions or banks.

Financial companies look for reliable people. That means, when someone gives you a loan, you pay it.  Show this reliability enough over time and banking institutions will begin to trust you. This type of loan supports you throughout the process.

However, it’s important to keep an eye out for loans. As with any type of interest-based income stream, you’ll likely come in contact with plenty of unreputable places. Run.

It’s important for banking institutions to trust you, but trust extends both ways. Not all institutions care about what’s best for you; they’re just in it for a profit. So, when choosing a company for your credit building loan, make sure to keep an eye out for a few red flags.

The Ever-Present Scam Artist

Credit builder loans also go by names like ‘fresh loans’ or ‘restart loans’. They come with their own set of payment schemes and fulfillment obligations. This is a trap for many people as they don’t read the fine print, and say yes to anything that gets the ball rolling.

They’re so desperate to get their credit back, they’ll do anything to get some relief.

Unfortunately, sharks smell fear. This type of desperation attracts the wrong type of business person. If you want to survive in shark-infested waters, you need to watch out.

Don’t see someone who isn’t officially accredited.

Ask to see proof. If they become defensive or evasive, this is a clear sign to look elsewhere.

Only meet with someone who does this as their full-time income.

Don’t settle for a person who offers loans as a side hustle. Chances are, they’re just looking for a quick buck.

Avoid places that have received poor ratings and reviews.

Check Yelp, Google, and Facebook for feedback from previous customers. This often gives a good idea of who they are.

A Lack of Improvement in 3-4 Months

Aside from the initial scam, you should also watch out for how things are progressing. If your credit score hasn’t improved within 3-4 months of taking the loan, then something is wrong here. This is a key indicator that something is not working.

You should watch out for these types of schemes. Some warning signs include:

  • They don’t offer any direct solutions. Only intangibles like time.
  • They only promise. No results.
  • They don’t answer your questions. Only evade and change the subject.

Want to make sure your credit builder loan is working? Ask the staff direct questions. Inquire about how your score is improving, along with what steps they’re taking to do even better.

Requesting You Take Out a Large Loan

Sketch financial firms will often push you to take out too large of a loan. You know how much more of a debt burden you can handle — and so do they. Be wary of any company pushing you beyond your limits.

Not only is it bad business, it could end up hurting your credit instead of helping it.

For many people, taking out small loans over time makes more sense than taking a giant loan that you pull off after a few years of financing. A good financial institution wants to keep you financially healthy. Pressuring you beyond your limits is a huge red flag.

Would you like to work with a reputable credit repair company? Contact us today!