will getting pre approval hurt my credit score

Good credit can be your ticket to low interest rates and speedy loan approvals. The decisions you make concerning your credit accounts can have consequences that last for years. "Account closed by consumer" means that you, not the lender, closed the account. Under.

Does Bank Loan Pre-Approval Hurt Your Credit?

A bank loan pre-approval occurs when a bank approves a borrower for a specific loan amount upfront based on the borrower's credit and income. This often occurs for home loans and other large purchases. When you apply for credit, this places a hard inquiry on your credit report.

What Causes Someone to Be Denied a Loan?

Along with a forced change of plans, it’s a blow to the ego when a lender denies your loan request. The amount of money available for lending may be the reason, as available funds fluctuate with the economy. The purpose for your loan also factors in -- home, car, home.

Does Cosigning a Child's Student Loan Impact Credit Scores?

Even if you never have to make a payment on the loan, cosigning a child's student loan will impact your credit score. Depending on your credit history, the student loan and your upcoming financial needs, you might need to think twice before you agree to be the cosigner on .

Not understanding of the ramifications of co-signing a debt might leave you -- and your credit score -- in the dumps. Co-signing is different from just verifying that a person will repay his debts, it is promising to pay those debts if the borrower defaults. If you co-sign for a .

Does My Credit Get Lower if I Close an Account?

The exact formula that FICO uses to calculate your credit score is a closely guarded industry secret. They don't want to make it too easy for a competitor to do what they do, and they don't want to provide anyone with a way to game the system. But depending on your circumstances.

A higher credit score often indicates a lower risk for creditors. Lenders and other institutions rely on your credit report to shed light on your financial history and ability to repay debt. Your score is a numerical expression based on the information in your credit report.

Which Factor Has the Largest Impact Percentage Wise on Your Credit Score?

Every time you apply for credit, open an account, make a payment or neglect to make a payment, the information appears on your credit report. But potential lenders don't want to spend hours analyzing all these minute details before advancing you money. They want someone else to.

How FICO Scores Affect Interest Rates

When you apply for an auto loan, mortgage or another type of loan, lenders look at more than your income. Your FICO score says a lot about your credit habits and lenders check this number to determine your creditworthiness. However, this three-digit number not only affects loan.

Your debt utilization ratio is the total amount you owe divided by the amount you have available to borrow. Outstanding debt includes every line of credit, such as credit cards, auto loans and mortgages. Debt utilization, also referred to as credit utilization, accounts for 30.


will getting pre approval hurt my credit score

Background Info: My wife and I are looking to purchase our first home/condo. Given our combined gross annual income of

$100k and lack of any actual debt, we're looking at properties in the $200-250k range. We currently have enough cash to put down

10% and some semi-liquid stock assets (UTMA funds) to bring that up to 15% and have still some emergency cash. We wanted to save up 20% to avoid PMI and tax escrow and whatnot, but we ran the numbers and decided we'd be paying less than rent even with PMI and such included. Apparently we have to continue paying PMI for at least 2yrs (at least with our bank we would), but our plan is to pay down the principal faster and keep the PMI to a minimum.

Question: It seems that getting pre-approved (not just pre-qualified) for a mortgage can help make the decision between you and another non-pre-approved applicant and makes closing quicker and easier (with some of the leg work up-front), but I'm having troubles reconciling that with 1) getting multiple quotes for mortgage rates (which tend to change from time to time :p) and 2) limiting potential damage to your credit score from multiple hard-pulls.

My understanding is that (correct me if I'm wrong here) a pre-approval would require a hard-pull of both of our credit reports from all three bureaus as well as additional info like proof of income, tax returns, residence history, etc. (requirements here may depend on lender, but my understanding is that they [generally?] get scores from all three and use the middle one, and I don't know if it's possible, or even worth it, for them to get scores without the report - credit reports & scores continues to be a confusing matter)

Any pulls within the same

30 days count as one credit inquiry as far as credit-scoring is concerned, though, so it would seem to make sense to have all potential lenders pull it within that time period. I'm considering four lenders (two brokers recommended by friends, one broker recommended by Google maps reviews, and my standard local/national/international bank - too many?), which seems like a lot of work, but I assume much of that will be similar for all four (e.g., we don't have different tax returns, income stubs, etc. to give to different lenders - they'd all be the same).

I'll sum this up in two somewhat-competing questions:

  1. Assuming you're within the 60-90 days that the pre-approval is valid for, will the lender do another hard-pull before approving the final loan? I assume not, but if that's not the case, it would seem to weaken the argument of getting multiple pre-approvals right away b/c you could have just had one done, find the best rate later, and close with the lender with the best rate (who would then do a final pull).
  2. If you just get pre-approved from one lender, what's to say they'll have the best deal when you decide to close? (no matter which method you use to pick that one initial lender)

Alternatively, am I over-thinking this? I do tend to do that, and perhaps an initial pull and a later final-pull won't hurt that much anyways. After all, the final-puller would know what the initial pull was all about.


Will Paying Off My Debt Hurt My Credit Score?

The CreditExperts at Credit.com recently received this question from a reader about whether paying off debt can hurt your credit score:

Hi, I have a 532 credit score at this point because I lost my job in 2008 and was forced to take another at a reduced pay scale. I have debt but will be paying all of it off in September. Will this raise my credit score or lower it, since I have no active credit cards or loans in my name?

Congratulations on becoming debt-free next month (September)! It’s an especially impressive feat considering you’ve lived on a reduced income for the past four years.

While your question of whether your score will go up or down is a good one, the more important question in your situation might actually be whether you will even have a credit score for very long after paying your loan in full. Losing your score entirely, if that were to happen, wouldn’t occur over night, but could happen after as little as one month if the loan you’re paying off is the last recently reported (updated) account on your credit report. (If you want to monitor your score for free, you can do so by signing up for Credit.com’s Credit Report Card.)

How do you lose your credit score? Since credit scoring formulas require at least one piece of recently updated information on your credit report before a score can be calculated, retiring your regularly updated loan debt after having already stopped using credit cards may have the effect of closing down the only item on your credit report that’s currently triggering a credit score. (Note: while this may be the only score “triggering” item on your report, all of the information on your credit report is included in the score that’s calculated.)

To avoid losing your credit score, make sure at least one active account appears on your credit report by either:

Will getting pre approval hurt my credit score 1) opening a secured credit card that you then use occasionally and quickly pay off without incurring finance charges; 2) opening a small (secured or unsecured) personal loan from a bank or credit union; or 3) having someone you trust add you as an authorized user to one of their active credit cards, so that their regularly-updated account can be added to your credit report and included in your credit score.

Lastly, to answer your question regarding the initial raising or lowering your score when you pay off the loan, I wouldn’t expect to see an immediate improvement in your score, primarily because the credit scoring formulas give more weight — both positive and negative — to credit cards than installment loans. Also, no longer having an open installment loan on your credit report could hurt your “mix” of credit, where the scoring formulas like to see a mix of both revolving and open installment accounts.

Again, kudos for paying off your debt! Now, just make sure you continue to maintain at least one regularly updated account on your credit report, so you can watch that 532 score steadily increase over time now that you’re debt free.


What Does a Pre-Approved Credit Card Offer Mean?

Will getting pre approval hurt my credit score

Anyone with a credit score has probably seen their fair share of pre-approved credit card offers in their mail box. You don’t have to have a great credit score to receive pre-approved credit card offers. People with poor credit also receive them. The difference, of course, is in the quality of the offer and maybe the issuer. But, should anyone get excited about receiving a pre-approved credit card offer? What does it actually mean to be pre-approved and how should you respond to an offer? These are important questions to consider as you contemplate your next offer. Spoiler alert: Don’t be too quick to jump on it.

When Pre-Approved is Not Really Pre-Approved

If you have ever received a pre-approved offer, you may already know that it doesn’t mean you are guaranteed the offer. In fact, you may even have been declined for a pre-approved offer. How is that possible if you are “pre-approved?” It is because you have not been pre-approved for a credit card; rather, you have been pre-approved to apply for the card. You still have to qualify for it based on the issuer’s credit requirements.

As you can probably imagine, the credit card issuers pay mega bucks for access to credit data to identify consumers who broadly fit a certain credit profile. They spend tens of millions of dollars accessing the data and then mailing out offers with the understanding that a very small percentage will respond. It’s purely a numbers game. If you meet the criteria, you will be mailed a pre-approval offer, inviting you to apply. Only after you apply will the credit card issuer take a closer look at your credit history and income information to determine if you actually meet their requirements.

Once you apply, there are three possible scenarios that can unfold: First, you could be approved for the pre-approval credit card with the same rate and terms stated in the offer. Second, you could be approved, but at a higher interest rate or a shorter introductory balance transfer period than what was stated in the offer. Third, you simply be declined.

Although the terminology is all open to interpretation, a “pre-screened” offer is more likely to lead approval for a credit card. When an issuer pre-screens you, they check your credit profile more thoroughly, but even with that, there is no guarantee you will be approved for a credit card, or for the stated offer.

Do Pre-Approved Offers Hurt My Credit?

To determine your suitability to be mailed an offer, issuers work off a list of criteria they can gather from data provided by the credit bureaus. In many cases, it doesn’t even require a soft pull of your credit history; but, even if it did, it would not have any impact on your credit score. However, if you take them up on their offer to apply for a credit card, the issuer will then do a hard pull of your credit history, which is then recorded as a hard inquiry. Hard inquiries can negatively impact your credit score if you have too many of them within a short period of time.

One hard inquiry every six months won’t have much of an effect if you have a lot of other, positive credit activity; but multiple inquiries within a short period of time will. The takeaway from this is to avoid applying for more than one pre-approval credit card offer within a six to 12 month period.

If you are declined for a card, you are entitled to a free credit report if you request it within 60 days. You will be able to examine it to see the reasons behind the denial and the work to improve your credit score if you want to apply for credit in the future.

What to do With Your Next Pre-Approved Offer

If you do receive a pre-approval credit card offer, you should first decide whether you actually need the additional credit card. If it is an offer than can improve your credit situation by lowering your interest costs or by lowering your credit utilization ratio (increasing your available credit can reduce your ratio), then you need to determine your chances of qualifying for the card based on the offer.

The average person only gets approved 30% of the time for a new credit card. If you have excellent credit, your chances of approval are closer to 90%. You should know where you fall on the credit worthiness spectrum. If you think there is even a chance you will be denied or approved for less favorable terms, you should probably not apply.

You should make it a practice to only apply for credit cards, pre-approved or not, for which you are more likely to quality. To do that, you may want to avoid pre-approved offers altogether and do your own research to find a credit card the best fits your credit profile and meets your needs.


will getting pre approval hurt my credit score

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Will getting pre approval hurt my credit score

Will getting pre approval hurt my credit score

Will opening and closing credit cards hurt your credit score? TravelSort reader Daniel comments on the Best Travel Credit Cards page:

" Lots of great insight here, thanks! I'm worried about hurting my credit score. For example, if I open the two different Citi cards you mention in #1 and then end up closing them a year or two later, won't that reflect poorly on my credit score or no? Also, it never occurred to me that Citi would let me (the same person) open up both cards at the same time. But I guess people do this all the time? (I see you suggest to wait at least a week before applying for the second one.) Thanks for your reply!"

Daniel asks a great question, and it's right to be cautious before jumping into applying for a lot of new credit cards. Before I get into his question, I'll recap some of the reasons you should NOT apply for new credit cards:

  • You already have credit card or other high-interest debt
  • You don't pay your credit card bill off in full every statement
  • You don't have a steady income
  • You plan to apply for a mortgage, refinance your house, or apply for a student loan or other major loan within the next year or so
  • You're tempted to spend more by having more credit cards

Will getting pre approval hurt my credit score

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