This is a very good question. First it is important to understand how your credit score is calculated. Your credit rating is calculated based on several variables, including: your payment history (do you have any late payments, charge-offs, etc.), the amount and type of debt that you owe, if you have maxed out any of your trade lines, and then several other secondary factors like the length of your credit history and how many recent inquiries have been made to look at your credit history.
This means inquiries into your credit can have a slightly negative effect on your credit score. You are concerned that looking for a mortgage or an auto loan may cause multiple lenders to request your credit report, even though you're only looking for one loan. To compensate for this, the score ignores all mortgage and auto inquiries made in the 30 days prior to scoring. So if you find a loan within 30 days, the inquiries won't affect your score while you're rate shopping. In addition, the score looks on your credit report for auto or mortgage inquiries older than 30 days. If it finds multiple inquiries, it counts all those inquiries that fall in a typical shopping period as just one inquiry when determining your score. For FICO scores calculated from older versions of the scoring formula, this shopping period is any 14 day span.
As far as trying to improve your score, a good strategy is to pay down all of your existing debts, and ideally keep a few trade lines open with little or no balance. Make sure that you pay down your credit card debt close to zero every month.
If you do not have an extensive credit history, you may want to establish small credit files with gas cards or department store cards. But again, make sure that you make your payments on time and pay the balances down to zero.
Bills.com makes it easy to compare mortgage offers and different loan types. Please visit the loan page and find a loan that meets your needs.
I hope that his helps you make the right decision for your particular situation, but be sure to shop around and find a loan that meets your needs.
I hope this information helps you Find. Learn & Save.
Best,
Bill
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