How Mortgage, Car, and Student Loan Requests Affect Your FICO Rating
If you are looking to buy a home , you are likely to go shopping. And seeking approval means multiple lenders will check your credit report. Loan requests can affect your score, but luckily, FICO takes this into account in its scoring model.
When multiple lenders ask you to advise, but you only take out one loan, FICO deals with it as follows:
To compensate for this, FICO Scores ignores mortgage, car, and student loan requests made 30 days prior to scoring . So, if you find a loan within 30 days, inquiries will not affect your grades while you are evaluating purchases. In addition, FICO Scores checks your credit report for mortgage, car, and student loan requests older than 30 days. If your FICO scores find them, your scores will treat requests that fall within a typical buying period as one request. For FICO points based on older versions of the scoring formula, this purchase period is any period of 14 days. For FICO points based on the latest version of the scoring formula, this purchase period is any 45-day period.
What is the difference between old and new formulas? Unfortunately, this depends on the lender. They can choose any formula they think the reporting agency will use to calculate your score.
In any case, there is no need to worry if you are shopping for lenders and they keep asking for your report. According to the FICO, your loan will not accept multiple uses if it happens within a specified time frame. However, they do offer to shop at your rate within the specified time frame. Find out more at the link below, then check out our guide to credit recovery.
Credit Checks and Inquiries | FICO