Comparing Rates Can Hurt Your Score
Lenders that tell you that comparing rates can hurt your store have a very obvious ulterior motive. If you are prevented from knowing what the competition is offering how will you know if you are getting a good deal?
The truth is the FICO formulae recognizes that consumers want to shop around for the best rates, particularly when it comes to taking out loans for cars and homes. That is why it allows you to make as many inquiries as you want during a fourteen-day period. This two-week search usually results in one negative credit on your report.
For you this means that you must shop for a car loan or mortgage in concentrated period of time and secure the loan before the thirty-day window is up. If you can manage to do this you your credit score will fine.
As stressed so many times before in this guide, the key to shopping for the best interest rates is to keep all of your shopping within that two-week window
One way to protect yourself from taking more than two weeks to compare rates and fees from lenders is to do some research first before you contact any lenders. Get your reports and scores first so that you know where you stand and then check Internet sites like MFICO.com or Bankrate.com to see the kind of rates you can expect to get with your score. That way you will have an idea of what is a good deal and what is a bad deal when you are offered one.
Another tip is to be careful not to give any credit information, your social insurance number or any other personal financial information to a car dealership until you are ready to buy the car. Many consumers have been caught off guard after finding dozens of inquiries on their credit reports and all they did was casually visit a dealership or two.
People who have poor credit need to be particularly careful about letting hard inquiries pile up in their credit report. Although someone who might have a good score might lose less than five points from a single inquiry (or a group of inquiries within 14 days) the impact of the accumulated hard inquiries can be greater on someone who has a troubled or brief credit history. This is because consistently trying for loans and being turned down can take a toll on your score over time.
Rather than injuring your score all the time by shopping for interest rates you might be better off to focus on improving your FICO scores by paying down your debt and using a secured credit card. After your scores have risen to the mid –700s you can then comparison shop for interest rates etc. without drastically impacting your score in a negative way.