Running Credit
Posted on December 27, 2005 - Filed Under Credit |
Here is my first installment for my lecture on "Your Credit and You". Maybe I’ll get that trademarked.
An innocent question that a mortgage broker will ask you, "Can I run your credit?"
Your response "When donkey’s fly!!"
Repeat after me.
"When donkey’s fly!!"
Never, ever let anyone run your credit. Never, ever, ever!
Every single time that someone runs your credit, your credit score drops between 5 and 10 points.
A girl I know, her and her young husband were utterly confused when they discovered that his "perfect credit" dropped by over 100 points. They thought it was because they had just purchased a Townhome. I told them that I had purchased a real home, way more expensive than their Townhome, and my credit score didn’t drop. Come to find out, they decided to shop around for the "best deal" and every mortgage broker asked the same question.
"Can I run your credit?"
True story: I am standing in Macy’s department store. I had to purchase a new pair of pants and a tie for an upcoming interview. When I approached the counter, the lady asked me if I’d like to apply for a Macy’s card. It would save me an additional "10% off" the already "on sale" items I had just selected. I did the quick math and I figured that I would save another $10. Why not?
"Can I run your credit?"
"Sure!"
Idiot.
My loan officer looked up at me through a stack of papers which was my credit report. "Cliff, why oh why did you turn on that Macy’s account?"
"It’s only for $500!"
Turns out, my credit score was too low for the great loan deal. I was 6 points away. And because of that, I had to accept half a point higher (0.5%) on my loan because of it. What does that translate to a month?
$400
Yep. Half a percentage point on my mortgage translates to $400.
Congradulations knucklehead! You saved yourself a whopping $10 so you could spend $400/month down the road!
Give yourself a well deserved kick in the pants!!
The next time someone asks you "Can I run your credit?" What do you say?
"When donkeys fly!!"
If you liked that post, then try these...
Having History on February 7th, 2006
I admit that for this weeks topic, I really struggled.
Rules of the Game on March 16th, 2006
The entire "credit score process" is being overhauled.
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