This article highlights the top 5 reasons people fear running their credit report.
As a mortgage provider, we must run a credit report in order to have an accurate picture of how you might qualify for a home loan. Every now and then, I run into someone who is concerned about having their credit run. They want me to give them an idea of how they might qualify, but they don’t want me to pull their credit report. However, without it, anything we say is purely conjecture.
It’s just like going to see your doctor for an illness. She will want to have have a thorough evaluation (blood pressure, pulse, lab work) in order to provide an accurate analysis. Without that information, it’s malpractice.
The concerns that I see most people have about having their credit report ran can be summarized in 5 general categories:
Concern #1: Your Credit Score Will Drop
True. It is true that when we run a credit report, it’s considered a hard inquiry, and it will result in their credit score dropping – but only by about 2-3 points. And this is only if they haven’t had another credit report ran for a mortgage in the last 15 days – within that time period, and all inquiries are counted as one.
Again, we must have a credit report in order to provide a complete and thorough analysis. The only reason this concern might be valid is if your credit score is on the threshold of not qualifying (620 for a conventional loan or 580 for an FHA or VA loan). And if your credit score is in that area, it’s absolutely imperative that we run your report anyway to give proper advice and direction.
Concern #2: Credit is Too Confusing
We take the guesswork out of a credit report. We’ll analyze the credit report for you and give you easy to understand feedback on the strengths and weaknesses of your credit report. Often, we can make suggestions on how to improve your credit score that takes very little time, effort or money. But we can only provide that feedback with a current and accurate report.
Remember, there are only five major factors that go into your credit score:
- Payment history
- Amounts owned
- Length of credit history
- New credit
- Types of credit used
Concern #3: It Costs Money to Run my Credit
You can always run your credit report yourself. When you do that, it doesn’t need to cost you any money, and it’s considered a “soft” inquiry and won’t lower your score by 2-3 points. The best place to get your own credit report is at www.AnnualCreditReport.com. Bypass the option to pay for your credit scores, and you can get one report for free from each of the three major credit bureaus every 12 months.
However, we cannot use that credit report for our analysis, and those reports are more confusing to read. Having us run your credit report reduces interpretation errors and allows us to use that credit report in your pre-approval.
Concern #4: My Report is Ugly, and I Don’t Want to See It
I understand, but avoiding it won’t make it better. Going back to my doctor analogy, if your arm is broken, it’s going to get fixed a lot quicker and with a better set by having a doctor look at it – and he’ll still need to take your blood pressure, pulse, lab work, etc.
If it’s that bad, we can introduce you to a highly respected credit repair company who can assist you on cleaning it up and removing incorrectly reported items.
Concern #5: There Might be Mistakes on my Credit Report (or I don’t know how to fix them)
The Fair Credit Reporting Act entitles you to a correct and accurate credit report. All you have to do is gather the documentation that shows the information is incorrect and send it into the credit bureaus. Unfortunately, most people get overwhelmed with sending in letters or uploading information, so they simply don’t do it and live with the mistakes. It’s not that hard to do, and you can also work with a credit repair company who can assist you with hit.
As mortgage professionals, it’s our job to help you understand your credit and put you in the best possible position to qualify for the loan you’re seeking. We just need the right tools to be able to help you the best way we can.