How credit inquiries may (or may not) affect your credit score

If you’ve applied for credit recently – maybe for a store card  – you may have come across the term “inquiry.” Even if you’re not familiar with credit inquiries, it’s critical to understand what they are, how different ones work, and what they mean. Fortunately, we have answers to your credit-inquiry questions here.

What’s a credit inquiry?

A credit inquiry is a credit check. It’s a request to view your credit by lenders — retailers, financial institutions and others who are legally allowed to see your credit report.

Types of inquiries: hard and soft.

A hard inquiry happens when a potential lender looks at your credit report and uses that information to decide whether to offer you credit and what the terms of the offer might be. Think of hard inquiries as the types of credit checks that happen when you apply for credit, whether it be a credit card, mortgage, car loan or other type of financing. Hard inquiries must be made with your permission and in connection with specific transactions.

A soft inquiry, on the other hand, is more of a routine credit check that doesn’t need to be done with your permission. Importantly, soft inquiries won’t show up on the credit reports potential lenders request to evaluate your creditworthiness. Soft inquiries can happen for a variety of reasons. One example is when potential lenders check your credit report to determine whether to make you eligible for any pre-approved offers. Another happens when one of your existing creditors checks your credit to make sure you’re still creditworthy. A soft inquiry is also triggered every time you check your credit.

One other thing to note: if you would like to see credit reports listing all your inquiries, soft and hard, check your free annual credit reports at AnnualCreditReport.com.

Why inquiries matter.

The first thing you should know is the kinds of credit reports potential lenders see will only list hard inquiries, not soft ones. In that sense, hard inquiries are the ones that “count.” That’s because credit scoring models usually factor in the number of hard inquiries you have when they’re calculating your credit score. Generally, credit scoring models tend to associate a high number of hard inquiries, especially if they’re made within a relatively short period of time, with a high credit risk. It’s important to watch the number of hard inquiries you make because too many of them may affect your ability to get credit at the lowest-available rates.

Do inquiries remain on your credit report forever?

In short, no. They are automatically removed 2 years from the date they first show up on your credit report. As with other aspects of credit, the more time that passes, the less effect hard inquiries may have.

Loan shopping and inquiries.

Let’s say you’re shopping for a mortgage or car loan and want to find one with a good rate and other terms that work best for you. After all, especially with big purchases, you want to make sure you get the best financing you can. But every time you apply for credit, a hard inquiry happens. Does that mean you shouldn’t shop around for a loan?

Fortunately, no. Credit scoring models tend to account for this kind of activity. Generally, credit scoring will count several inquiries made over a relatively short period of time, like 45 days, as one single inquiry. That way, you won’t necessarily get penalized for causing several hard inquiries while shopping for one loan.

Bottom line.

Inquiries are a key, and often misunderstood, part of credit. But they aren’t everything. While you want to pay attention to how frequently you apply for credit, credit health encompasses much more than just hard inquiries. Keep an eye on your hard inquiries, but don’t lose sleep over them, especially if you’re paying your bills on time, not using too much of your available credit, and otherwise practicing healthy credit habits. In other words, keeping your hard inquiries in check should be just part of a healthy-credit habits!


This article is courtesy of TransUnion. TransUnion is a consumer credit reporting agency. TransUnion collects and aggregates information on over one billion individual consumers in over thirty countries including 200 million files profiling nearly every credit-active consumer in the United States.

Selling your home? Do these things first.

If you’ve been thinking about putting your home on the market this spring, you’re going to want to start getting ready now. By doing so, you will save money. Better than that, the following basic tips will help you walk away with higher net proceeds than by doing nothing at all.

Without a doubt, it’s a tight housing inventory right now. That means it’s a seller’s market in many neighborhoods. But that doesn’t mean sellers can command any price or that they don’t need to take steps to prepare their home for sale. Not, at least, if they want to sell quickly and for the best possible price. Today’s buyers have high expectations.

The Simple Stuff

The reality is that it’s likely too late to do major renovations, but it is not too late to roll up your sleeves and get busy removing all the “red-flag” distractions that stand out like a blinking light that scare away a prospective buyer. I’d love to offer you professional advice about how to prepare your home for sale without overspending or fretting much at all. As the seller, you control the condition of the property, my team controls the marketing, and together we partner to sell the listing. Here are my recommendations:

Think Like a Buyer. First and foremost, you need to shed your stubborn proprietary connection to your home of X years. It needs to happen, as soon as possible. Sure, you are emotionally connected to your house and it holds many memories. Selling your home requires a shift in your mind-set from homeowner to seller. It’s also a good time to put yourself in a buyer’s shoes. Think about what attracted you to your home in the beginning as well as what you love about it or your neighborhood now. The things you know about your property can be helpful for marketing.

>Don’t Overlook the Small Stuff.  An important addendum to the previous tip is to be thorough and diligent. Don’t skip the obvious. In fact, get the advice of an real estate professional. Get the opinion of a unbiased neighbor or friend. Solicit honest evaluations of the general condition of your home.

>Visit Open Houses & Parade of Homes. Continuing the effort to transform your thinking from homeowner to seller, scout-out nearby homes on the market to assess your competition and get inspiration for small improvements you can make to boost your home’s appeal for buyers. Visit the line-up of Parade of Homes. Check out paint colors, layout of furniture, fixtures, etc.

>Hire a Home Inspector. If you have time, you may also want to consider hiring a home inspector for a pre-listing inspection, particularly if you have an older home. If the inspector finds something that needs work, it’s better to repair it and provide receipts for the buyers than turn the issue into a negotiating point. It’s never too early to prepare for the spring housing market. The sooner you define your priorities, enlist experts and begin making necessary repairs or updates, the closer you are to a successful sale.

>Spruce Up the Exterior. We’re talking about curb-appeal. Let’s face it, the exterior of the property is the first thing a buyer will see whether online or driving by. Now is the time to make sure it looks its best. Walk around the entire exterior of the home, and conduct an assessment. Consider pressure washing, painting, having the windows cleaned, cleaning out gutters, trimming back any overgrown or dead landscaping, cleaning the front door and changing out any worn door hardware that may look old and corroded. And, make sure the front doorbell actually works!

>Service The Heating/Cooling System. A home inspector is going to check this anyway, so beat ’em to the punch by having the system serviced and cleaned. When was the last time it was serviced anyway? The lifespan of a furnace is 15-25 years. If you haven’t had your system looked at since it was new you’re facing a red flag by a potential buyer.  It’s better to take care of any repairs that may need addressing now versus waiting until a buyer decides to make an offer. 

>Do a Light Bulb Check. Easy-peasy. Make sure all of the lightbulbs are working and free of dirt and debris. Yes, these need cleaning too — just make sure they are off. Don’t forget to check the outdoor lights as well.

>Check the Smoke & CO² Detectors. Even if your dectoros are hard-wired, now is the time to make sure that all detectors have new batteries are in good working order. Replace any old ones as an inspector is likely to flag those during a home inspection and recommend that they be replaced.

>Blue Tape It. If you were building a new house your builder would ask you to do this before final inspection. Conduct a thorough walk through of the interior of the home. If there are any nicks, dents or scratches on the walls and moldings, blue tape them so you are reminded to have each area repaired. The more wear and tear a home appears to have, the more the buyer is going to chip away at the asking price.

 

>Deep Clean & Declutter. This costs you next to nothing and will have the biggest pay-back for your time investment. You need to look through the lens of a stranger who has never been to your home. THEY WILL SEE EVERYTHING. Now is the time to give the home that deep clean it needs. If needed, consider hiring a cleaning crew to tackle this; the more hands, the better. Perhaps, host a family cleaning party! Invite your family and extended family to volunteer for a day to help out. (Be sure to provide pizza and beverages. It will be money well-spent!)

Deep cleaning means wiping down all of the baseboards and moldings and cleaning cabinets, appliances (including the oven) and every corner from top to bottom including light fixtures and ceiling fans. It’s also a good time to gather all those unwanted closet items together to donate as well as any unused furniture and decor. The less stuff in the house, the less there is to organize and keep clean. White-space is the name of the game here.

>Clear Out the Garage. This space is often overlooked when preparing a home for sale. Don’t forget this space. Make sure the garage is clean, in good repair, organized and that you can actually walk through it. Do you really need all those tools? Again, create open, white space. Consider painting the floor or having an epoxy finish put down. And that ceiling? Buyers also look up when touring this space, so make sure any drywall cracks or loose seams are repaired.


Buyers recognize and appreciate homes that have been taken care of. Removing the red-flags should be job #1 when preparing your home to be sold. Taking some time to invest in home maintenance before selling will likely yield a big payoff when it becomes offer time.

Indoor Air Quality: A Growing Concern for Home Buyers

You found the house you love. You’ve made an offer and it’s been accepted. Now, you’re under contract going through the final evaluations and inspection contingencies prior to closing . Does your purchase agreement reflect your concern about environmental air quality for comfort and good health in the family? The following are some key points to consider and things to watch out for when considering a new purchase. Remember, sellers do not like to spend money on issues for a home they are selling. It’s simple human nature.

First and foremost, the most important resources at this evaluation stage are your agent and home inspector. These professionals can be either incredibly invaluable or quite damaging depending on who you get. Are they thorough and detailed? Do they care about you, the client, or are they just completing a transaction? Do they have a quality team of specialists as a resource when questions arise? If so, these are great signs that they will protect you and be your first line of defense. Oftentimes, environmental concerns can be easily overlooked and become costly mistakes that a home buyer can make from a financial and health perspective when your “team” is not what it could be.

Homes are built to hold or energy and therefore will “hold” bad air quality as well. This means holding environmental issues like mold spores, asbestos fibers, and odors of all types, which may increase in severity over time. Oftentimes, we can’t tell bad air quality with a sense of smell. As an example, residual asbestos fibers or excess mold spores in relation to outdoors can be hard to detect, unless sampled because they are invisible. Conversely, if a seller has painted over pet odor or smoke odor without proper remediation, this can become a costly issue if that sealant breaks over time because we cannot contact the waste (source) that is producing the odor (symptom). Whether seller or buyer, it is critical that we resolve these issues at their source, thereby eliminating symptom and future cost concerns to remediate.

Air quality and environmental concerns in the residential real estate market can include pet odor, smoke odors, mold, asbestos, hazardous animal waste, and uncontrolled or unmitigated water issues. Water issues can include roof or soffit damage, negative drainage, water line leaks, and sewer backups.


Remodeling and asbestos. It is critical that you sample for asbestos in the areas you plan to remove IF you are concerned about environmental air quality. Asbestos can be found in drywall, drywall mud, drywall tape, textures, tiles, popcorn ceilings, mastics, insulations, and ducting systems to name a few. Do not assume that asbestos is not present simply because someone says it isn’t, or the home is a certain age such as, “1984.” For peace of mind for health and financial it could be the best $300 you spend with a sampling professional. The sampling professional is trained and has no conflict of interest. If the sampling comes up positive for asbestos it will give you the opportunity to assess costs, write an inspection objection, and/or negotiate with complete information to protect budgets. If the home was freshly remodeled it is important to get that information to make sure the work was done safely otherwise you could be moving into a beautiful home with high volumes of asbestos fibers present.


Mold and Water Damage. The first rule is water control. No water damage or humidity means no mold. Is there separation at baseboards? How does the caulking look in the bathroom shower and tubs? Water leaks or issues like the water line from the refrigerator? Negative drainage? Hail damage? Past insurance claims? These are all good things to look for or ask the seller regarding previous damages. Mold air sampling by a professional is also a quality and quantifiable method to identify issues. As an example, when remediating mold and asbestos it is critical that negative air containment is achieved with a HEPA air scrubber so all airborne particulate goes into the air scrubber instead of dispersing throughout the house. Without this protocol, you could be buying a beautiful house with terrible air quality and not even know it. No different than radon concerns.


Pet and Smoke Odor. The most common technique for these issues is to simply seal or paint over the contaminated area or introducing an alternative fragrance into the property. Are the windows always open? Air fresheners of any sort present? Is there new carpet or paint? Pets on the disclosure forms? These are all signs to ask more questions about why these things are present or to get a specialist in to evaluate further. The problem with painting or fragrances is these techniques are temporary, cost-effective fixes to enable the sale of the property without having to discount for these issues. If a sealant fails it is very challenging to resolve because we cannot contact the source and are oftentimes forced to remove the contaminated flooring or walls, which can be expensive in multiple areas, including being forced to discount for the issue when you eventually sell the property.

These issues and other environmental concerns are important because every human being has a different immune system. Young or elderly can be more susceptible just as pregnancy or certain illnesses and medications can compromise the immune system or heighten our sense of smell. Health issues from bad air quality are normally manifested over time and daily exposure because we spend approximately 60% our time inside the home which can slowly beat down the immune system. At that moment we then have two issues, compromised health and environmental air quality issues causing it.

If you want good environmental air quality or are concerned about it, please do your homework prior to the inspection objection deadline and closing because legitimate issues can be put on the inspection objection, which can become a disclosure issue for the seller, thereby giving you a better negotiating position in a legitimate way while protecting your family and finances.


Bob Hamilton manages various businesses that handle environmental remediation for air and water quality issues. Bob is available for free phone consults. He can be reached by email at bob.hamilton@stinkinc.com, or by phone at (612) 354-4498. Learn more about his businesses at StinkInc.Avir Environmental, Inc.