Avoiding Multiple Hard Pulls On Your Credit Profile
Written by Dongmiao Cui   


Every time you apply for new credit, no matter it’s a home loan or an auto loan, a hard pull will hit your credit score. Then, you may wonder, “wouldn’t it be unfair if I have to shop around for loans even though I do not intentionally want so many hard pulls in a row”?

In fact, the credit bureaus have also recognized this problem. The potential harm caused by multiple pulls might have deprived consumers from their own rights to shop around for the best options. In response, FICO has implemented a series of changes in rules to deal with credit inquiries on home and auto loan. However credit inquiries on credit cards are not included in the new rules.

The new rule states that multiple auto or mortgage credit inquiries in any 14-day period will be counted as 1 inquiry. In other words, if the FICO score is considered, you can do rate shopping for auto loans within two weeks without worrying about hard pulls hurting your credit score.  Knowing the rules guiding hard pulls, you can avoid getting multiple hits by following the following suggestion:

Step 1: Check your credit score

You want to check your credit report and score first, so that you will have this useful information ready when you negotiate with your banks and dealers.

Step 2: Get pre-approval from a bank

With your own credit score by hand, you can start calling around local banks to ask what their minimum credit score requirements are.  If your score is good enough, you need to ask them about their down payments, interest rates and terms. Once you picked the lender, you only need to go to the bank and apply for the loan. You will typically have 30 days before the pre-approval expires.

Step 3: Have problem getting pre-approved?

If your credit score is unfortunately not good enough, you still have a chance to obtain your loans while avoiding hard pull damage. For auto loans, your dealer often is more than happy to forward your loan application to various lenders. You should have at lest 14 days of unlimited hard pulls that will be bundled in 1 pull.

There are other resources online as well. For example, Vehicle Financing Network will pull your credit score and match it up with the lender that you may have the biggest shot with. Then your application will be forwarded to that lender. This option also helps you prevent getting hit by multiple hard pulls. 


 

    

Last Updated on Sunday, 25 July 2010 23:44