Advantages of “Soft” Credit Pulls.
People looking to borrow money, whether it’s for a mortgage or an un-secured swimming pool loan, are aware that their credit scores influence their loan options. People with higher scores can typically borrow money at a lower rate and cost than people in lower credit tiers. So, when you’re looking for a loan, you want to be sure not to do anything that will lower your score, such as applying for a loan.
You read that right! When you submit a loan application to a lender, it’s common for them to do a “hard inquiry” to see your credit scores and credit history. It’s not uncommon to see a borrower’s credit score decrease due to multiple credit inquiries, especially for unsecured loans. This often happens without the borrower’s knowledge or ability to stop it before their credit scores take a dive. What can you do to prevent this? The negative impact of these inquiries on your credit can be avoided or at least minimized. Here is what you need to know to take control and protect your credit score.
1. Have You Checked Your Own Credit?
At a time when there are so many credit monitoring applications, a large swath of the public thinks they know what “my credit score” is. The fact of the matter is that each person can have as many as 50 different scores. Even the big three credit bureaus (Experian, Equifax, and Trans Union) have multiple scores and these scores can vary by as much as 100 points!
There are up to 50 major scores available for each borrower. A borrower can’t be sure what scores a lender will see. However, paying bills on time and limiting hard credit inquiries are things you can control to improve or maintain your scores.
2. Limit Hard Inquiries On Your Credit.
When choosing a lender or finance company for a loan, make sure they will not pull a “hard inquiry” without speaking to you first. You don’t want multiple lenders each making independent inquiries. You may think you are dealing with a single lender when in fact they send your application to multiple lenders. That’s when your credit takes a hit and can drop your scores significantly. This is especially important when it comes to unsecured loans because every point counts. Being one-point low can mean as much as a 2% rate bump.
3. Consult with a Financing Company that uses “Soft Inquiries”.
Companies like Viking Capital, a swimming pool financing company, are often a preferred option for borrowers. Financing companies typically work with multiple Lenders and are familiar with each lender’s loan portfolio and underwriting details. They are a one-stop-shop for borrowers as they will guide you to the best lender for your needs and qualifications and they are able to do this with a “Soft Credit Pull” which won’t impact your credit score. Viking Capital (www.poolloan.net) has been in the swimming pool financing business for over 20 years. They have seen the impact of hard inquiries on a borrower’s ability to get a great loan.
As a result, when they receive a loan application, their policy is to only pull a “soft inquiry” until they speak to you.
Based on the information obtained, they target the best loan option for you. Only after you give the OK will the targeted lender pull your credit as a “hard inquiry”. This way, you get the benefit of multiple lenders evaluating and competing for your business without the “penalty” of multiple inquiries on your credit.
If you’re late to the game in terms of protecting, and your credit score is already lower than you
would like there are ways to improve your credit score. It is never too late to improve- while
sometimes it can take a few years, the effort is always worth the trouble. In the meantime, continue protecting your score the best you can.