With each New Year many decide to get rid the old and bring in the new. For example, many of my clients are out buying new cars and/or furniture. You will find a lot of great deals and incentives from which to choose, but choose wisely because it could cost you several points on your credit score. The reason is that when you apply for credit, even for a new car or furniture, these companies check your credit. Each inquiry can be counted against you.
You really want to strive to have no more than 7 to 10 inquires in a 12-month period and no more than 3 in a 90-day period. You may think you are only authorizing one company to pull your credit to make a decision to offer you credit; however, in reality, some businesses choose to “shop” your credit around to multiple credit companies. I have seen some companies shop a client’s credit to as many as 20 lending companies. This is where you will find your score dropping the most. If you are shopping for a car and go to different dealerships over a weekend, you could cost yourself an 80 point credit score drop. This is where you, as the buyer, must beware. Do not be afraid to ask if they shop your credit, and you can also only authorize them to pull your credit once.
To avoid the worst from happening to you, know what you want before you buy it and make sure not to authorize businesses to pull your credit until you are ready to make a buying decision. This will save you any inconvenience of a lower score. Of course, if you are in the middle of buying home, or you are getting ready to make an offer, do not buy a new car or anything else until you have closed on your new home. I have seen many clients turned down for a home loan just because they bought some consumer goods before they closed on their home. Remember that your mortgage lender will pull your credit initially, and then they oftentimes pull an updated credit report just prior to closing.
I wish you a very Happy and “credit-wise” New Year.
Sarah Kahley-Rufo
A+ Credit Consulting LLC.
303-778-7782
