What is a Credit Score & Is it true that my Credit Score goes down every time it’s checked for home buying?
There are many misunderstandings about credit scores out there. Some people believe that they don’t have a credit score and many people think their credit scores don’t really matter. These sorts of misunderstandings can hurt your chances at getting some jobs, at good interest rates, and even your chances of getting an apartment or a house.
So, if you have a bank account and bills, then you have a credit score, and your credit score matters more than you might think. Your credit score can be called by multiple names, including a credit risk rating, a FICO score, a credit rating, a FICO rating, or a credit risk score. All of these terms mean the same thing, it’s the three-digit number that lets the lenders get an idea of how likely you will be able to repay your bills.
Every time you apply for credit, a job that requires you to handle money, or even apply for some more exclusive types of apartment living, your credit score will be checked.
Your credit score is grounded on your past financial responsibilities, past payments and credit, and it offers potential lenders with a quick snapshot of your current financial state and your past repayment habits.
Your credit score basically lets the lenders know quickly how much of a credit risk you are! Based on your credit score, lenders decide whether to trust you financially – and give you better rates for a loan or not.
Now moving on to the topic of weather your credit rating goes down when its checked multiple times or if the affect is very marginal.
When your credit is pulled or looked at by a lender to extend a line of credit, they perform a “hard pull” (regular inquiry) which shows them your full credit report, and in most cases, your credit score. An inquiry entry is placed on your credit file, from the bureau(s) they pull from.
Your score can be affected by these hard pulls, but by a very marginal amount. There is NO set amount of points that it goes down and it does not get too affected.
When you’re shopping for an auto loan, and more importantly for a home loan, you are granted a grace period of time to apply for multiple lines of credit/offers from numerous lenders, and only getting docked for one (1) hard pull against your overall score. However, each inquiry will still show on your credit report. This reason alone, allows you to ‘shop around’ for the best deal without affecting your credit rating too much.
For a home mortgage in Ontario, Canada, you have a 30-day period from the time of your first inquiry from a financial lender, to apply for as many home loans as you would like, and it to have an overall combined effect of one(1) pull towards your score. The inquiries will show up on your report, and (possibly) lower your score regardless of if you’re extended a line of credit or not.
Let me repeat, there is NO set amount of points that any single hard pull takes. It is all part of a very large and a conditional formula to each credit reporting bureau. What they are likely pulling, is your FICO score, which bases its number off your Equifax credit report.
What you should take away from this article is, pay your bills on time and be financially responsible so that lenders are able to trust you which will help you purchase your next Dream Home in Ontario, Canada.