4 Things to Know About Having Your Credit Pulled


4 Things to Know About Having Your Credit Pulled

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Having your credit pulled by a bank or lender is very common. However, the type of credit inquiry that they are pulling may not be as obvious. Many banks and lenders want to see your financial profile before they are able to offer you any real terms. If the bank or lender is quoting you anything before they have pulled credit, it cannot be substantiated. Having the bank or lender that you trust pull your credit is important. Here are some reasons why:

  1. Credit History Evaluation

Many times when the bank or lender is reviewing your credit profile on the Credit Report, it will show all inquiries and tradelines. Tradelines are credit accounts that have been submitted to the credit bureaus for reporting purposes (credit card payments, car payments, student loans, etc). Your credit history will tell the bank or lender your credit story. They are able to piece together the financial credit path to determine whether you will be able to qualify for the mortgage or the credit that you are applying for. The lender may be able to provide advice about how to increase your credit scores.

  1. Credit Pull Types

There are two types of credit pulls. This means there are two ways that a bank or lender will determine whether you are too much of a risk to lend to based on what type of credit scores they want to see.

The first type of pull is called a Soft Pull. This means they are only pulling one of three credit scores. It could be the Equifax, Experian or Transunion score. Only one score is used to determine the risk of lending with this risk layering measurement.

The second type is called a Hard Pull. This type of credit evaluation requires all three credit scores to be used in determining whether or not the bank or lender will be able to extend credit. This type of credit pull can sometimes adversely affect your credit scores overall score. However, this should not be a reason to not go through with having your credit pulled if you are serious about applying for credit. The reason to have an excellent credit score is to be able to use it for credit when needed.

  1. Find Unknown Collections

During the process of applying for credit there may be some collections that show up on the credit report. This is something that your bank or lender will review in great detail with you if you have a Hard Pull completed. The Hard Pull will show more information about your credit history. This can be great if they spot something that should not be there. If this happens, be sure to get the docket number and phone number of the agency that is reporting the collection so you may contact them directly. If there are Collections or judgments on your credit report, they may need to be satisfied before the credit application can close.

  1. Receive Free Credit Advice

During the process of having your credit pulled and examined by a professional. They will most likely advise you on your credit scores and how to potentially increase them if need be. The reports that the banks get are different than the reports that consumers will receive. They are a little more in depth and show information that is helpful for increasing credit scores. Depending on which company is pulling the reports, it can show how much specific debts should be paid off to increase the scores by a certain amount. This can be extremely helpful if a person does not qualify for a certain mortgage product by just a few points on their credit score.

In conclusion, do not be afraid to have your credit pulled. The credit bureaus will sometimes provide a two week grace period on your credit score points so that you may shop around at different financial institutions. They do not want people to be afraid to get quotes from multiple places. When applying for credit, be sure to ask these four points to ensure that you are familiar with your existing credit profile.

 

If you have any questions, feel free to contact the HC team and we will answer the questions that you have. If we cannot answer them, we will find someone that can.

 

As we like to say here at HC:   Ask. Learn. Save.

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