Online Loan Comparisons

Be careful when using Online Loan Comparisons

Be careful of online loan rate comparisons, timing is everything. Online loan rate quotes are easy to get – type in some personal information and you can get a quote on a car loan, personal loan, student loan, or mortgage in seconds. This is free and convenient, leading many people to compare several companies at once in order to make sure that they get the best deal possible.

The problem is that since online quotes are a fairly recent phenomenon, Credit Bureaus count each such quoted estimate as a “Hard Inquiry.” This means that if you compare too many companies online by asking for quotes, your credit score will fall due to too many “Inquiries.” This does not mean that you shouldn’t seek online quotes for loans – not at all. In fact, online loan quotes are a great resource that can help you get the very best rates on your next loan. What this information does mean, however, is that you should research companies and narrow down possible lenders to just a few before proceeding.

Your Credit Score: Facts, Tips and Explanations

There is so much misinformation out there about how your credit works.  Let me dispel the myths right now with the exact information right from Fair Isaac, the creator of the FICO scoring system that is in widespread use.  Your credit score is made up of five factors:

  1. The length of your credit history makes up 15% of your score.  In other words, how long have you had things like credit cards, home loans, and auto loans.  The longer the better.  DO NOT under any circumstances close old unused accounts simply to clean up your credit report.  This will hurt your credit!
  2. Obtaining new credit accounts for 10% of your score.   When someone starts to apply and get approved for numerous credit accounts, lenders worry about over extension.  They see this by looking at the number of “hard” inquiries on your bureau reports.  Each hard inquiry can take 2-5 points away from your score and remain on your report for as long as two years.