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Hard And Soft Credit Checks Before Buying A Home · Military Real Estate Rookie Show

• 0:00
  SPEAKER_00: Hello everyone.
• 0:02
  SPEAKER_00: Welcome to the Military Real Estate Rookie Show.
• 0:05
  SPEAKER_00: This episode is very important because I had a client that didn't understand what a soft and hard credit report or what it means to pull credit from different sources.
• 0:18
  SPEAKER_00: So I wanted to share this episode because I know that a lot of us who are first-time homebuyers and need to understand what is a difference between a soft pole and a hard pole.
• 0:31
  SPEAKER_00: I thought this episode would be beneficial to those ones that needed to educate themselves on it.
• 0:38
  SPEAKER_00: So so hey, hey, everybody.
• 0:41
  SPEAKER_00: Welcome back to the Military Real Estate Rookie Show.
• 0:43
  SPEAKER_00: I'm your host, Rena, where we talk about real estate, building wealth, and protecting your wealth and making smarter financial moves.
• 0:53
  SPEAKER_00: I'm your host, Rena.
• 0:54
  SPEAKER_00: I'm serving, I'm a realtory and I'm serving Georgia and Florida.
• 0:58
  SPEAKER_00: And today we're talking about something that can make people very nervous, and especially when they're coming to prepare to purchase a home.
• 1:05
  SPEAKER_00: So we're talking about more specifically, we're talking about hard credit pools versus soft credit pools.
• 1:14
  SPEAKER_00: I'm not a mortgage lender, but I just wanted to give my clients some education on the overall picture.
• 1:21
  SPEAKER_00: Okay.
• 1:22
  SPEAKER_00: So have you ever applied for credit cards and noticed your credit score dropped?
• 1:26
  SPEAKER_00: Well, have you ever gone to a car dealership and started looking at vehicles and suddenly someone happened to pull it and your credit score was run and your credit score moved?
• 1:36
  SPEAKER_00: Or maybe you're getting ready to buy a home and someone tells you, don't let anybody pull your credit.
• 1:41
  SPEAKER_00: You don't want your credit score to go down.
• 1:44
  SPEAKER_00: Well, hold on a minute.
• 1:46
  SPEAKER_00: Okay, is every credit check back?
• 1:49
  SPEAKER_00: Does checking your own credit lower your score?
• 1:53
  SPEAKER_00: Can you shop around with multiple mortgage lenders?
• 1:57
  SPEAKER_00: And what happens when you apply for a car loan right before trying to purchase a home?
• 2:04
  SPEAKER_00: These are some important questions, guys, because your credit can affect you, especially when you're trying to qualify for financing and interest rate you offer, right?
• 2:14
  SPEAKER_00: And if you're planning to buy a home and you don't want to accidentally create problems for yourself before you get even to the closing table, today I'm going to explain what hard inquiries and soft inquiries are and why they matter and how they work and what you can do to protect yourself.
• 2:31
  SPEAKER_00: We're also going to talk about some situations that military families and veterans and first-time home buyers need to understand.
• 2:39
  SPEAKER_00: So grab your coffee, get comfortable, and let's talk real estate and credit pool.
• 2:45
  SPEAKER_00: All right, so let's start with the basics.
• 2:48
  SPEAKER_00: Okay, so a credit inquiry happens when someone requests access to your credit report.
• 2:56
  SPEAKER_00: Your credit report contains information about your credit accounts, payment history, balances, other financial information used when you evaluate your credit worthiness, right?
• 3:08
  SPEAKER_00: It's like a report card.
• 3:10
  SPEAKER_00: There are three major nationwide credit report agencies, and there are Equifax, I'm sure you heard of these, Experian and TransUnion.
• 3:20
  SPEAKER_00: These companies collect information pertaining to your credit worthiness, your history.
• 3:27
  SPEAKER_00: So it collects the data.
• 3:29
  SPEAKER_00: And when you apply for financing, a lender may request your credit information to help determine whether you qualify for the loan.
• 3:38
  SPEAKER_00: But here's one thing that gets very interesting to the situation, right?
• 3:44
  SPEAKER_00: Not all credit checks are treated the same way.
• 3:47
  SPEAKER_00: No, no, they're not.
• 3:49
  SPEAKER_00: So these are two major types of incorrect inquiries: a hard inquiry and sometimes called a hard pull, and a soft inquiry, which is called a soft pull.
• 4:01
  SPEAKER_00: So they sound very different, right?
• 4:03
  SPEAKER_00: And they may sound similar too, but they are served different purposes.
• 4:08
  SPEAKER_00: And I can tell you the effects on your credit score.
• 4:11
  SPEAKER_00: So let's break them down.
• 4:13
  SPEAKER_00: Okay, here we go, guys.
• 4:14
  SPEAKER_00: A hard inquiry generally happens when you apply for a new credit card, right?
• 4:21
  SPEAKER_00: Authorize a lender or credit to check your credit report as part of the application process.
• 4:28
  SPEAKER_00: Think about the time you may apply for a mortgage, a car loan, a personal loan, etc., right?
• 4:38
  SPEAKER_00: Those are hard inquiries.
• 4:41
  SPEAKER_00: A credit card, of course, is a hard inquiry.
• 4:45
  SPEAKER_00: So those are uh examples of hard inquiry pulls.
• 4:51
  SPEAKER_00: So when you submit an application, the lender may request your credit report, which I just said is just a report of have you been paying on time and things of that nature.
• 5:05
  SPEAKER_00: So that request can create a hard inquiry.
• 5:09
  SPEAKER_00: Okay, now why does this matter?
• 5:12
  SPEAKER_00: Because credit scoring models may consider how recently and how frequently you apply for credit.
• 5:22
  SPEAKER_00: They want to make sure that you're not all over the place applying for credit, right?
• 5:27
  SPEAKER_00: When lenders see several recent applications, they may want to understand why you're taking all this additional financing and you're trying to buy a home.
• 5:35
  SPEAKER_00: Let's use an example.
• 5:37
  SPEAKER_00: All right, imagine you have a credit score of 720.
• 5:42
  SPEAKER_00: Very good score.
• 5:44
  SPEAKER_00: And you decide you want a credit card, so you apply.
• 5:48
  SPEAKER_00: Real simple.
• 5:48
  SPEAKER_00: The credit card company reviews your credit and reports a hard inquiry.
• 5:53
  SPEAKER_00: And guess what?
• 5:54
  SPEAKER_00: Your score may decrease slightly depending on the credit pool and the scoring model being used.
• 6:02
  SPEAKER_00: Now, let's say you apply for another credit card a few days later.
• 6:07
  SPEAKER_00: That's another application, and it may result in another hard inquiry.
• 6:13
  SPEAKER_00: Then you apply for a personal loan, another inquiry appears, and another one.
• 6:18
  SPEAKER_00: Before you know it, your credit report shows several applications for a new credit.
• 6:23
  SPEAKER_00: So now, does one heart inquiry automatically ruin your credit?
• 6:29
  SPEAKER_00: Absolutely not.
• 6:31
  SPEAKER_00: But if you're going to go out there and keep running your credit through a heart inquiry process, it will significantly decrease your credit score.
• 6:42
  SPEAKER_00: A single inquiry usually has a small effect.
• 6:47
  SPEAKER_00: And some people may see a little change or a little difference in their credit, but not a major change when you having to pull your credit once in a while.
• 6:57
  SPEAKER_00: But repeatedly applying for new credit without a plan can become a problem.
• 7:03
  SPEAKER_00: So you ask yourself, and here's what I want you to remember.
• 7:08
  SPEAKER_00: A hard inquiry is not necessarily a bad thing.
• 7:11
  SPEAKER_00: It's the pattern of applying for credit that's overall can help, can hurt your financial situation.
• 7:18
  SPEAKER_00: That's what's matter.
• 7:20
  SPEAKER_00: And if you need a mortgage and you need to apply for a mortgage, you shouldn't go out there and go and apply for different types of credit cards recently.
• 7:29
  SPEAKER_00: And if you need a car loan, you may need to apply for a car loan after you buy the home.
• 7:34
  SPEAKER_00: The goal isn't to avoid even hard inquiries forever.
• 7:38
  SPEAKER_00: The goal is to understand when you're authorizing one and avoiding unnecessary application.
• 7:44
  SPEAKER_00: You could very much be denied for the mortgage.
• 7:47
  SPEAKER_00: So we're going to go ahead and explain what is a soft inquiry.
• 7:54
  SPEAKER_00: Now, a soft inquiry does not affect your credit score.
• 7:57
  SPEAKER_00: Let's just get that straight, right?
• 7:59
  SPEAKER_00: So that's right, it does not.
• 8:00
  SPEAKER_00: So when someone says, hey, look, I'm just gonna do a soft inquiry, it doesn't affect it.
• 8:04
  SPEAKER_00: You can check your own credit without lowering your score.
• 8:07
  SPEAKER_00: Yes, there are websites out there that you can, and we probably do an episode on one of those.
• 8:12
  SPEAKER_00: Let's say you're thinking about buying a house next year.
• 8:16
  SPEAKER_00: You know where you stand financially.
• 8:18
  SPEAKER_00: You go online, access your credit card, and review your accounts.
• 8:22
  SPEAKER_00: That is generally considered a soft inquiry because you have not applied for some credit card, you know, or a car loan.
• 8:32
  SPEAKER_00: It does not lower your credit score.
• 8:35
  SPEAKER_00: You can also have soft inquirers when an existing creditor reviews your account.
• 8:41
  SPEAKER_00: Yes.
• 8:41
  SPEAKER_00: If you have a Macy's card or some other card and they want to do a soft inquirer to increase your credit score, they can do or lower it.
• 8:48
  SPEAKER_00: It happens.
• 8:49
  SPEAKER_00: An existing credit reviews your account and company checks your credit for pre-screened offers.
• 8:53
  SPEAKER_00: You get those ones in the mail or they send them to your email.
• 8:57
  SPEAKER_00: You check your own credit.
• 8:59
  SPEAKER_00: Or certain employees or insurers review credit information.
• 9:02
  SPEAKER_00: Yes, insurers do.
• 9:04
  SPEAKER_00: So insurance companies review your credit.
• 9:07
  SPEAKER_00: And here's another important point.
• 9:10
  SPEAKER_00: A self-inquiry is generally visible to you when you review your credit, but it's not visible to other lenders.
• 9:17
  SPEAKER_00: Purchasing your report is your personal way of knowing where you stand.
• 9:25
  SPEAKER_00: So it's not the same as a hard inquiry.
• 9:27
  SPEAKER_00: So if you're wondering about checking your credit because you think it will lower your score, don't let that fear stop you.
• 9:34
  SPEAKER_00: Check your credit, know where you stand.
• 9:36
  SPEAKER_00: You should know what's going on with your credit report.
• 9:39
  SPEAKER_00: And you should know whether your accounts are reported correctly.
• 9:42
  SPEAKER_00: And you should know whether there are errors or accounts you don't recognize that you can dispute.
• 9:49
  SPEAKER_00: Checking your own credit is one of the best things that you can ever do.
• 9:53
  SPEAKER_00: And it's the first step you can take when preparing for home ownership.
• 9:57
  SPEAKER_00: You cannot make a good financial plan if you don't know where you're starting.
• 10:03
  SPEAKER_00: And I hope that makes sense to everyone that is trying to buy a home in the next few years.
• 10:09
  SPEAKER_00: Check your own credit.
• 10:11
  SPEAKER_00: Now, moving on to let's compare hard pulls and soft pulls.
• 10:16
  SPEAKER_00: Now we went over the definition, so let's go ahead and compare.
• 10:20
  SPEAKER_00: Let's make this easy.
• 10:22
  SPEAKER_00: Imagine two different situations.
• 10:25
  SPEAKER_00: Situation one, you visit a credit monitoring website to check your credit score, like credit karma, credit sesame, etc.
• 10:35
  SPEAKER_00: You're not applying for a loan.
• 10:36
  SPEAKER_00: You're simply reviewing the information, making sure that everything is accurate.
• 10:41
  SPEAKER_00: That's generally a soft inquiry.
• 10:44
  SPEAKER_00: Your credit score isn't lowered just because you checked it, remember?
• 10:48
  SPEAKER_00: It's your personal credit that you're trying to make sure that everything is accurate.
• 10:53
  SPEAKER_00: Situation two, you visit a bank and submit an application for a personal loan.
• 10:59
  SPEAKER_00: The bank requests your credit report and determine whether it will approve you or not.
• 11:05
  SPEAKER_00: That's generally a hard inquiry.
• 11:07
  SPEAKER_00: They're actually pulling your credit.
• 11:10
  SPEAKER_00: So the difference is the purpose of the credit check, how the request is made.
• 11:16
  SPEAKER_00: Now, here's something I want you to pay attention to, my military real estate rookies and my first home, first-time home buyers.
• 11:23
  SPEAKER_00: Sometimes a company advertises that you can check whether you're qualified before completing their full application.
• 11:31
  SPEAKER_00: That preliminary review may be a self-inquiry.
• 11:33
  SPEAKER_00: You get these in the mail all the time, or they send it through your email, or it pops up on your phone.
• 11:40
  SPEAKER_00: But once you decide to move forward with this actual credit application, the company may perform a hard inquiry.
• 11:48
  SPEAKER_00: So don't assume every offer that you get in the mail, check your rate, work this way, the same way.
• 11:55
  SPEAKER_00: It doesn't work the same way.
• 11:57
  SPEAKER_00: Checking your rate works just like it is.
• 12:01
  SPEAKER_00: It's an offer.
• 12:02
  SPEAKER_00: If you go ahead and you know move to the application, that's a hard inquiry.
• 12:07
  SPEAKER_00: Ask the company directly, what will it be, a soft or hard inquiry?
• 12:13
  SPEAKER_00: And ask, will you perform a credit check if I decided to accept another offer, accept this offer?
• 12:20
  SPEAKER_00: Ask them.
• 12:20
  SPEAKER_00: Get clear before you submit your information because you very merely you could be denied, and then you have this hard inquiry on you.
• 12:27
  SPEAKER_00: You have a right to understand what you're authorizing, and you need to ask these questions.
• 12:32
  SPEAKER_00: It can very much help you or hurt you.
• 12:35
  SPEAKER_00: Okay, so let's get into the mortgage.
• 12:38
  SPEAKER_00: The mortgage shopping secret every home buyer should know.
• 12:41
  SPEAKER_00: Okay, you ready for this?
• 12:43
  SPEAKER_00: Now let's talk about something especially important to everybody preparing to purchase a home.
• 12:49
  SPEAKER_00: This is the good stuff.
• 12:51
  SPEAKER_00: Mortgage shopping, talking to lenders, getting the best rate you can.
• 12:56
  SPEAKER_00: I hear people say all the time, I don't want to apply with multiple lenders because I don't want all those credit inquiries.
• 13:05
  SPEAKER_00: Well, and I understand that.
• 13:07
  SPEAKER_00: Does it understand that that is a concern?
• 13:10
  SPEAKER_00: But here's the good news when it comes to that particular situation.
• 13:14
  SPEAKER_00: Credit scoring model recognize that people shop around for home mortgages all the time.
• 13:21
  SPEAKER_00: The mortgage financing, it is okay.
• 13:24
  SPEAKER_00: Okay, so you should be able to compare mortgage offers without being treated as though you're trying to open up five different mortgages.
• 13:31
  SPEAKER_00: No, it doesn't work like that.
• 13:32
  SPEAKER_00: They know that you're shopping around.
• 13:35
  SPEAKER_00: So under commonly used scoring models, multiple mortgages inquiries made with a designated rate shopping period can be grouped together when calculating your score.
• 13:47
  SPEAKER_00: That means that if you're shopping around a market mortgage, the time frame, you know, within that month, I'll say.
• 13:54
  SPEAKER_00: So depending on the scoring model, the shopping window can generally take 14 to 45 days.
• 13:59
  SPEAKER_00: They know that you're shopping for a mortgage.
• 14:03
  SPEAKER_00: The Consumer Financial Protection Bureau explained that multiple mortgage inquiries within a 45 window are treated as one inquiry for credit score purposes.
• 14:13
  SPEAKER_00: But I want you to understand something.
• 14:15
  SPEAKER_00: The exact treatment depends on the scoring model being used.
• 14:19
  SPEAKER_00: Older scoring models may have a shorter shopping window, so it's best to ask the mortgage lender.
• 14:24
  SPEAKER_00: So my advice is simple: do your homework first, identify the lender you want to contact, the lender or the lenders, compare their loan programs, interest rates, fees, and customer service, then complete your mortgage shopping with a relatively short period of time, 14 to 45 days.
• 14:46
  SPEAKER_00: Don't stretch the process out unnecessarily because you only have that short window, okay?
• 14:50
  SPEAKER_00: And to decide whether you want to have this mortgage.
• 14:53
  SPEAKER_00: And here's another important point.
• 14:55
  SPEAKER_00: Don't just compare the interest rate.
• 14:58
  SPEAKER_00: Look at the annual percentage rate, lender fees, discount points, closing costs, and overall loan terms.
• 15:05
  SPEAKER_00: That should be given to you once you decide to go with that mortgage lender.
• 15:09
  SPEAKER_00: A lender advertising the lowest interest rate may not necessarily offer the best overall deal.
• 15:17
  SPEAKER_00: So you have to ask that question.
• 15:19
  SPEAKER_00: You have to sit there and look at it and compare.
• 15:21
  SPEAKER_00: For example, he says one lender offers you a mortgage rate that looks very attractive, right?
• 15:27
  SPEAKER_00: But the fees are significantly higher.
• 15:30
  SPEAKER_00: Hmm.
• 15:30
  SPEAKER_00: Another lender offers a slightly higher rate, but much lower upfront fees.
• 15:36
  SPEAKER_00: You need to compare these numbers to determine what you are comfortable with when it comes to this.
• 15:42
  SPEAKER_00: And remember, the purpose of shopping around is to help you make an informed, smart decision.
• 15:49
  SPEAKER_00: Because at the end of the day, you're responsible for paying this mortgage.
• 15:54
  SPEAKER_00: Don't let free your credit inquirer stop you from comparing mortgages.
• 15:59
  SPEAKER_00: It's not that you are going to have a bad credit ding on your credit.
• 16:04
  SPEAKER_00: They know that you're shopping around for mortgages.
• 16:07
  SPEAKER_00: So a small potential score impact may be worth finding a great mortgage lender.
• 16:13
  SPEAKER_00: So if you're using a VA loan or FHA loan, conventional loan or another mortgage program, ask lenders to explain specific costs and requirements associated with that loan.
• 16:25
  SPEAKER_00: Don't assume all mortgage products aren't the same because they're not.
• 16:29
  SPEAKER_00: They're different businesses.
• 16:32
  SPEAKER_00: So you just have to sit down and compare the rates and the terms of the mortgage.
• 16:38
  SPEAKER_00: And I hope that makes sense.
• 16:41
  SPEAKER_00: Now, all right, we're pulling up to a car dealership.
• 16:45
  SPEAKER_00: Let's talk about something that can catch people off guard.
• 16:48
  SPEAKER_00: The car dealership, you walk off onto the lot, you see the vehicle you love, the salesperson starts asking questions.
• 16:57
  SPEAKER_00: How much do you want to pay, make your payments to be?
• 17:00
  SPEAKER_00: How much are you putting down?
• 17:03
  SPEAKER_00: And you're trading, are you trading your vehicle?
• 17:06
  SPEAKER_00: Then someone says, Let's see what we can do to get you approved.
• 17:11
  SPEAKER_00: Hmm.
• 17:12
  SPEAKER_00: And before you know it, your credit is being reviewed.
• 17:16
  SPEAKER_00: Yes.
• 17:17
  SPEAKER_00: And here's what I want you, you guys to understand, my military real estate rookies.
• 17:23
  SPEAKER_00: I really do want you guys to understand this.
• 17:25
  SPEAKER_00: When you're shopping for an auto loan and multiple inquiries within that application process, it may be treated as one inquirer for scoring purposes.
• 17:36
  SPEAKER_00: That can help protect your credit by comparing financing offers.
• 17:40
  SPEAKER_00: So you need to ask them, you can pull one hard inquiry for multiple car dealership applications and see if they can do that.
• 17:50
  SPEAKER_00: But you have to ask them.
• 17:51
  SPEAKER_00: But don't confuse that with applying for several different types of credit, because that's different.
• 17:56
  SPEAKER_00: For example, shopping for an auto loan and a mortgage are two different types of credit.
• 18:01
  SPEAKER_00: You should not assume that these inquiries will group together as one because it's not.
• 18:07
  SPEAKER_00: Auto loan is different from a mortgage loan.
• 18:09
  SPEAKER_00: And here's another mistake I want you to avoid.
• 18:12
  SPEAKER_00: Don't purchase a vehicle simply because the dealership tells you that you can afford the monthly payment.
• 18:17
  SPEAKER_00: No, don't do that.
• 18:19
  SPEAKER_00: You need to be comfortable with the terms and et cetera.
• 18:21
  SPEAKER_00: And you need to consider the total price, the interest, the rate of the loan, how long you're going to have this loan, maintenance, you know, and how the new payment affects your overall debt ratio.
• 18:31
  SPEAKER_00: Because you remember, you're trying to get a home.
• 18:34
  SPEAKER_00: And let's say you plan to purchase a home in the next few months, right?
• 18:39
  SPEAKER_00: You decide to buy a brand new vehicle.
• 18:41
  SPEAKER_00: Hmm.
• 18:41
  SPEAKER_00: You take out a$750 monthly card payment, knowing that you're about to buy this home or want to buy this home.
• 18:49
  SPEAKER_00: And that's a new debt.
• 18:50
  SPEAKER_00: And it could affect your debt to ratio and income, your debt-to-income ratio and your mortgage qualification.
• 18:58
  SPEAKER_00: Even if your credit score remains strong, the additional monthly payment could change how much mortgage lenders is willing to approve you.
• 19:07
  SPEAKER_00: Yes, that is true.
• 19:09
  SPEAKER_00: So that's why timing matters.
• 19:11
  SPEAKER_00: I recommend you buy it after you get your home.
• 19:14
  SPEAKER_00: But moving on.
• 19:16
  SPEAKER_00: If you're preparing to buy a home, talk with your mortgage lender before purchasing a vehicle or taking on a significant financial obligation.
• 19:25
  SPEAKER_00: Ask your mortgage lender, hey, is this a good idea for me to buy this car before I get the mortgage approval?
• 19:30
  SPEAKER_00: Don't make a major, major financial decision without understanding how it could affect your home purchase.
• 19:37
  SPEAKER_00: This is major because you don't want to have that affect your home purchase.
• 19:43
  SPEAKER_00: A little thing like that.
• 19:45
  SPEAKER_00: Now, what happens when you apply for multiple credit cards?
• 19:48
  SPEAKER_00: Like I said, you have the right to ask your lender if this is a good idea before you start applying, right?
• 19:56
  SPEAKER_00: This is another area where people can accidentally create problems when they're going through the mortgage process.
• 20:01
  SPEAKER_00: You go shopping, you see an offer for 20% off, and you open a store card, you apply.
• 20:07
  SPEAKER_00: A few weeks later, another company offers you a promotional balance transfer, you apply, and then you see another one in offering the mail, and then you apply.
• 20:15
  SPEAKER_00: And before you know it, you submitted several, several applications.
• 20:20
  SPEAKER_00: But you're supposed to be trying to get approved for this mortgage.
• 20:24
  SPEAKER_00: Unlike mortgage and auto-loan rates shopping, multiple credit cards applications generally do not receive the same special rate shopping treatment.
• 20:32
  SPEAKER_00: Each application may create a separate hard inquiry.
• 20:37
  SPEAKER_00: And that's not the only thing to consider.
• 20:40
  SPEAKER_00: My military real estate rookies and my first-time home buyers and anybody that's buying a home.
• 20:45
  SPEAKER_00: Opening several new accounts can also affect the age and mix of your credit use, your available credit, and your overall debt.
• 20:55
  SPEAKER_00: Let's say you're planning to purchase a house in six months and you apply for three new credit cards because you want to earn rewards.
• 21:04
  SPEAKER_00: It sounds very entertaining and advertising, right?
• 21:08
  SPEAKER_00: And you may have a good intention, but now you have several new accounts, recent inquiries, and possible new balances.
• 21:15
  SPEAKER_00: That could complicate your mortgage application.
• 21:18
  SPEAKER_00: I'll be honest with you.
• 21:20
  SPEAKER_00: My recommendation: if you're planning to buy a home soon, avoid unnecessary credit card application at all.
• 21:28
  SPEAKER_00: Do not touch it until you get in your home.
• 21:31
  SPEAKER_00: You don't need to open new accounts every time somebody offers you a discount.
• 21:36
  SPEAKER_00: Think about the bigger financial goal.
• 21:39
  SPEAKER_00: You're trying to build wealth and you want your mortgage to be completely approved.
• 21:45
  SPEAKER_00: You want the keys.
• 21:47
  SPEAKER_00: If home ownership is your priority, protect your credit profile and avoid unnecessary changes while you're preparing to build wealth and prepare for that mortgage application.
• 21:59
  SPEAKER_00: Your debt.
• 22:00
  SPEAKER_00: To income ratio matters.
• 22:04
  SPEAKER_00: All right, so I'm gonna move on to home.
• 22:06
  SPEAKER_00: How long do you hard inquiries stay on your credit report?
• 22:09
  SPEAKER_00: That's a good question.
• 22:10
  SPEAKER_00: How long do hard inquiries stay on your credit report?
• 22:14
  SPEAKER_00: Well, if I get a hard inquiry, how long will it stay on my credit report?
• 22:21
  SPEAKER_00: That is a very good question.
• 22:23
  SPEAKER_00: Generally, hard inquiries can remain on your credit report for up to two years.
• 22:28
  SPEAKER_00: However, the scoring impact doesn't necessarily last for an entire two years, but you'll see it on your credit for at least two years.
• 22:35
  SPEAKER_00: For example, FICO's scoring model, it typically considered hard inquires for most recent 12 months and when calculating a score.
• 22:44
  SPEAKER_00: So just because you can see an inquiry on your credit doesn't mean it's affecting your score.
• 22:51
  SPEAKER_00: The same way you know throughout the entire period that you had it.
• 22:55
  SPEAKER_00: And remember, not every scoring model works exactly the same.
• 23:00
  SPEAKER_00: And this is why I don't want you to panic when you see an inquiry.
• 23:05
  SPEAKER_00: Look at the date, look at the company, determine whether you're authorized it, or you want to dispute it, or there's some type of discrepancy going on, you can always dispute it and review the rest of your credit profile for those disputes or wrong credit profiles.
• 23:27
  SPEAKER_00: If you see an inquiry you don't recognize, don't automatically assume it's a fraud or but don't ignore it either.
• 23:35
  SPEAKER_00: Contact the company listed and credit reporting agency if you believe the inquiry was unauthorized, reporting incorrectly.
• 23:42
  SPEAKER_00: You can do that.
• 23:44
  SPEAKER_00: If you suspect identity theft, which happens, take the appropriate steps to protect yourself and your information.
• 23:51
  SPEAKER_00: You know, maybe a fraud alert alert or credit freeze.
• 23:54
  SPEAKER_00: Your credit report is an important financial document that represents you.
• 24:00
  SPEAKER_00: Review it regularly.
• 24:01
  SPEAKER_00: Usually you can have free credit reports for every year for free.
• 24:06
  SPEAKER_00: And I'm I may do an episode on that later in the podcast.
• 24:11
  SPEAKER_00: But what if you're preparing to buy a house, right?
• 24:14
  SPEAKER_00: And all of this is going on, and you're trying to buy this house.
• 24:18
  SPEAKER_00: Suppose you have decided that 2027 is going to be your year to purchase a home, a beautiful home, a home that you can call home.
• 24:27
  SPEAKER_00: Maybe you're renting right now.
• 24:29
  SPEAKER_00: Maybe you're living in a military housing.
• 24:31
  SPEAKER_00: Maybe you've been stationed somewhere for several years and tired of moving.
• 24:36
  SPEAKER_00: Or maybe you're a veteran who wants to use your VA loan benefit, right?
• 24:42
  SPEAKER_00: Whatever your situation is, I want you to start preparing before you begin looking at a home.
• 24:49
  SPEAKER_00: And these are some tools.
• 24:51
  SPEAKER_00: This is why I picked this topic because I want to educate my military real estate listeners.
• 24:58
  SPEAKER_00: Here's some things you should do.
• 25:00
  SPEAKER_00: Review your credit report.
• 25:02
  SPEAKER_00: That's the first thing you need to do.
• 25:03
  SPEAKER_00: Pull it.
• 25:04
  SPEAKER_00: Go to annualcreditreport.com and obtain your report from Equifax Experience TransUnion.
• 25:11
  SPEAKER_00: It's free.
• 25:12
  SPEAKER_00: Just create an account, do it.
• 25:14
  SPEAKER_00: See where you're at.
• 25:15
  SPEAKER_00: Review your account balances, payment history, and personal information.
• 25:20
  SPEAKER_00: This is very important.
• 25:21
  SPEAKER_00: Do not come to a realtor and you say, Well, I didn't know all this thing was going on.
• 25:25
  SPEAKER_00: Go ahead and do your homework first.
• 25:27
  SPEAKER_00: Look for accounts that you don't recognize: incorrect balances, duplicate accounts, incorrect late payments.
• 25:32
  SPEAKER_00: You can dispute in accurate information throughout the whole credit report.
• 25:36
  SPEAKER_00: You can do that.
• 25:38
  SPEAKER_00: Second, understand your credit score.
• 25:41
  SPEAKER_00: Your credit score, your credit scores are not the same thing as your credit report, right?
• 25:46
  SPEAKER_00: It's a number versus a credit report.
• 25:49
  SPEAKER_00: Your report contains the information being reported about your credit history.
• 25:53
  SPEAKER_00: Your score is calculated using information that the report has.
• 25:58
  SPEAKER_00: So that's that's different.
• 26:00
  SPEAKER_00: Different lenders may use different scoring models.
• 26:03
  SPEAKER_00: That's why it's good to go to a couple different lenders.
• 26:06
  SPEAKER_00: So don't assume score you see in the app is necessarily the same score your mortgage lender will use.
• 26:12
  SPEAKER_00: And I may do an episode on that later.
• 26:16
  SPEAKER_00: Third, avoid unnecessary new credit.
• 26:18
  SPEAKER_00: Period.
• 26:18
  SPEAKER_00: Don't do it.
• 26:19
  SPEAKER_00: If you're getting ready to apply for a mortgage, think carefully before you have a new credit because it will drop your score.
• 26:25
  SPEAKER_00: No personal loan, no vehicle loans.
• 26:28
  SPEAKER_00: You don't want to create unnecessary changes to your financial profile.
• 26:31
  SPEAKER_00: Do not drive up with a brand new car.
• 26:35
  SPEAKER_00: Now, fourth, pay your bills on time.
• 26:38
  SPEAKER_00: Your payment history is important because of your credit report.
• 26:41
  SPEAKER_00: So you need to pay your bills on time.
• 26:43
  SPEAKER_00: Make sure you stay current on your obligations.
• 26:46
  SPEAKER_00: Talk to your creditors.
• 26:48
  SPEAKER_00: Call them.
• 26:50
  SPEAKER_00: Number five, watch your credit card balances.
• 26:54
  SPEAKER_00: Your credit utilization can affect your credit score.
• 26:58
  SPEAKER_00: Yeah.
• 26:58
  SPEAKER_00: Try to avoid running your cars up all the time while you're preparing to purchase a home.
• 27:04
  SPEAKER_00: And finally, talk to a mortgage lender early.
• 27:06
  SPEAKER_00: Don't wait till when you're ready, you think you're ready.
• 27:09
  SPEAKER_00: Talk to them like a year out and prepare to move up to this.
• 27:12
  SPEAKER_00: It's like graduating to buy a house.
• 27:15
  SPEAKER_00: You don't have to wait until you find a house to understand your financing options.
• 27:19
  SPEAKER_00: Don't be disappointed.
• 27:20
  SPEAKER_00: You can't buy a home.
• 27:22
  SPEAKER_00: Talk to the mortgage lender early so you can identify the areas that need attention before you apply.
• 27:28
  SPEAKER_00: It reduces the stress, trust me.
• 27:30
  SPEAKER_00: And if you're not ready today, doesn't mean that you cannot be ready tomorrow.
• 27:35
  SPEAKER_00: But you got to do your homework.
• 27:37
  SPEAKER_00: You got to talk to the lender and see where you're at.
• 27:40
  SPEAKER_00: Hey, I want to, my goal is to buy a home next year.
• 27:43
  SPEAKER_00: You can develop a plan, work through the issues, and revisit the option with the lender that you chose.
• 27:49
  SPEAKER_00: Now, military families and veterans, don't let a PCS surprise your credit.
• 27:54
  SPEAKER_00: I want to speak to you guys directly.
• 27:57
  SPEAKER_00: Military life can create a financial change that people outside the military may not fully understand because we move all the time.
• 28:05
  SPEAKER_00: You may get PCS orders, you know, permanent change of station orders.
• 28:11
  SPEAKER_00: You may have to move quickly.
• 28:13
  SPEAKER_00: You may need to arrange transportation, temporary housing, deposits, and other expenses.
• 28:20
  SPEAKER_00: You know, you might be purchasing a vehicle because your new duty station requires you to have different transportation arrangements.
• 28:28
  SPEAKER_00: Or perhaps you're renting and transitioning from military pay to a different income structure.
• 28:32
  SPEAKER_00: Who knows?
• 28:33
  SPEAKER_00: All these changes can affect your financial planning.
• 28:38
  SPEAKER_00: And if you're preparing to purchase a home during the transition, you need to be particularly careful about new credit application, as I said before.
• 28:47
  SPEAKER_00: Let's say you're getting ready for PCS, permanent change of station.
• 28:51
  SPEAKER_00: You decide to finance a new vehicle.
• 28:53
  SPEAKER_00: Sounds good.
• 28:54
  SPEAKER_00: Open a credit card to recover to cover moving expenses and apply for a personal loan.
• 29:00
  SPEAKER_00: Each of these decisions could affect your debt obligations.
• 29:03
  SPEAKER_00: Some may generate hard inquiries.
• 29:05
  SPEAKER_00: You don't want to do that if your goal is to purchase a home.
• 29:09
  SPEAKER_00: Now imagine you also trying to qualify for a mortgage, like I said.
• 29:14
  SPEAKER_00: Your lender may need to reevaluate your credit, income, debt, etc.
• 29:20
  SPEAKER_00: That could make the process more complicated.
• 29:23
  SPEAKER_00: You may have to rent first if you start doing that.
• 29:26
  SPEAKER_00: So before making major purchases during a PCS or a military retirement transition, speak with your lender if you're planning to buy a home.
• 29:35
  SPEAKER_00: It's very important that you don't do anything without getting that lender approval.
• 29:41
  SPEAKER_00: Ask what financial changes you should avoid during the mortgage process.
• 29:45
  SPEAKER_00: If you're trying to, your goal is to buy a home.
• 29:48
  SPEAKER_00: And don't forget that military families may have access to different housing and financial resources.
• 29:53
  SPEAKER_00: So you may not even need to do all of that.
• 29:56
  SPEAKER_00: If you're eligible for a VA loan, learn how the benefit works, what costs may apply, and what the lender requires.
• 30:03
  SPEAKER_00: Your VA loan benefit is valuable, but you still need to consider your overall financial obligation and position.
• 30:11
  SPEAKER_00: So the goal is to make your transition as smooth as possible with no surprises, minimal surprises, and moving into your new home.
• 30:22
  SPEAKER_00: Now, let's talk about five credit inquiry myths.
• 30:25
  SPEAKER_00: I want you to stop believing because I hear it all the time with my clients.
• 30:29
  SPEAKER_00: You know, so checking your own credit lowers your score.
• 30:33
  SPEAKER_00: We talked about this.
• 30:35
  SPEAKER_00: It's false.
• 30:36
  SPEAKER_00: It doesn't lower your store your score.
• 30:38
  SPEAKER_00: Just go online to angrycreditreport.com and pull your credit to see where you're at.
• 30:43
  SPEAKER_00: This helps you and the lender.
• 30:45
  SPEAKER_00: Checking your own credit is generally a solid inquiry and does not lower your store, your score.
• 30:49
  SPEAKER_00: It helps you.
• 30:51
  SPEAKER_00: It helps you.
• 30:52
  SPEAKER_00: You should review your credit regularly.
• 30:54
  SPEAKER_00: Pull it.
• 30:55
  SPEAKER_00: It's free.
• 30:56
  SPEAKER_00: It doesn't cost you anything.
• 30:59
  SPEAKER_00: Every hard inquiry takes 20 points off your score.
• 31:02
  SPEAKER_00: Now, this is a myth because there's no universal point deduction for every hard inquiry.
• 31:08
  SPEAKER_00: It's very different for whoever pulled your credit.
• 31:12
  SPEAKER_00: The effect depends on your credit profile and the scoring model being used.
• 31:17
  SPEAKER_00: So you just can't blanket it and say 20% 20%.
• 31:21
  SPEAKER_00: One inquiry may have a small impact, while another one may have a major impact.
• 31:27
  SPEAKER_00: It just depends.
• 31:28
  SPEAKER_00: So it depends on who's pulling your credit.
• 31:32
  SPEAKER_00: Myth number three, you cannot shop with multiple mortgage lenders.
• 31:36
  SPEAKER_00: That is not true.
• 31:37
  SPEAKER_00: As I said before, you need to shop with multiple mortgage lenders.
• 31:42
  SPEAKER_00: It's okay.
• 31:44
  SPEAKER_00: You know, proving your credit and getting to know these markets lenders, they may have different terms that you are comfortable with, you know.
• 31:53
  SPEAKER_00: And they may have special program, who knows?
• 31:56
  SPEAKER_00: Special financing.
• 31:57
  SPEAKER_00: So the key is to shop within a focus period and understand the rules.
• 32:02
  SPEAKER_00: 14 to 45 days is what I said before.
• 32:06
  SPEAKER_00: Now, both number four, a soft inquiry means a company can never use your credit.
• 32:11
  SPEAKER_00: Not exactly.
• 32:12
  SPEAKER_00: A soft inquiry does not affect your credit score, but the company performing the review may still have access to your credit and may continue to pull a hard inquiry because they see that it might be okay to pull that hard inquiry.
• 32:25
  SPEAKER_00: The important distinction is that soft inquiries are not treated like hard inquiries for credit scoring.
• 32:31
  SPEAKER_00: So just make sure you understand that process, okay?
• 32:35
  SPEAKER_00: So myth number five, if I have a good credit score, I can apply for as much credit as I want.
• 32:41
  SPEAKER_00: No, absolutely not.
• 32:43
  SPEAKER_00: A good credit score does not mean that you're going to take out unnecessary debt, especially when you're trying to get a mortgage.
• 32:49
  SPEAKER_00: Lenders also look at your income, your obligations, your payment history, and the other factors that affect your credit.
• 32:55
  SPEAKER_00: Can you afford this mortgage is the bottom line.
• 32:58
  SPEAKER_00: You can have a strong credit score and still take on more debt and budget comfortably, but the lender wants to look at your overall financial responsibility.
• 33:10
  SPEAKER_00: So the goal isn't simply to have a good credit score, the goal is to use credit responsible and build financial stability.
• 33:19
  SPEAKER_00: Now, I'm gonna give you guys some credit protection information.
• 33:25
  SPEAKER_00: And I created this checklist because I want to make sure you guys understand what to do when it comes to your credit.
• 33:32
  SPEAKER_00: And this is before I wrap up, I want to give you a simple checklist.
• 33:36
  SPEAKER_00: You ready?
• 33:36
  SPEAKER_00: If you plan it to purchase a home, refinance, or make another major financial move, here are seven things to remember.
• 33:45
  SPEAKER_00: Number one, check your credit report before applying for financing.
• 33:48
  SPEAKER_00: I already gave you guys that information.
• 33:50
  SPEAKER_00: Please go out there and do that.
• 33:52
  SPEAKER_00: Number two, know whether a company is performing a hard inquiry versus a soft inquiry.
• 33:57
  SPEAKER_00: Ask them that question before you do any application.
• 34:00
  SPEAKER_00: Number three, ask questions before submitting a credit application.
• 34:04
  SPEAKER_00: Number four, avoid necessary credit card and personal loan application while preparing for mortgages.
• 34:09
  SPEAKER_00: Don't go out there and get a card, you know, and unnecessary credit.
• 34:13
  SPEAKER_00: Number five, if you're shopping for a mortgage or an all-lo-loan, complete your comparison shopping within a short period of time.
• 34:20
  SPEAKER_00: Don't just have it linger.
• 34:22
  SPEAKER_00: Number six, keep paying your bills on time and manage your credit card balances.
• 34:26
  SPEAKER_00: Remember, we talked about the utilization.
• 34:28
  SPEAKER_00: I think it's like 30%, but you have to ask the lender, you know.
• 34:32
  SPEAKER_00: And number seven, talk to your mortgage lender before making major financial changes in your home buying process.
• 34:38
  SPEAKER_00: If you're in a home buying process, ask your lender whether you should buy their car, furniture, etc.
• 34:44
  SPEAKER_00: If you're already under contract to purchase a home, don't assume that getting approved means you can't you can't never start applying for credit.
• 34:52
  SPEAKER_00: Just get through the loan process first.
• 34:54
  SPEAKER_00: Your lender may review your financial information again before closing.
• 34:58
  SPEAKER_00: Okay, so don't make those moves.
• 35:01
  SPEAKER_00: Avoid opening new credit and financing furniture, purchasing a vehicle, taking out new debt before talking to your lender.
• 35:09
  SPEAKER_00: They may pull your credit, you know, at the end.
• 35:12
  SPEAKER_00: You want to make sure all the way to closing table without expecting financial problems.
• 35:17
  SPEAKER_00: You want the keys, you want to walk out there clean, you know, and no issues.
• 35:23
  SPEAKER_00: So know your credit before you make your next move.
• 35:26
  SPEAKER_00: That is your homework.
• 35:28
  SPEAKER_00: This is what you do.
• 35:30
  SPEAKER_00: You pull your credit.
• 35:31
  SPEAKER_00: What I just said, and your creditreport.com.
• 35:34
  SPEAKER_00: We talked about hard inquires, soft inquires, mortgage shopping, auto loans, credit card, military relocation, preparing your credit before purchasing a home.
• 35:44
  SPEAKER_00: Here's what I want you to remember, my military real estate rookies.
• 35:48
  SPEAKER_00: And I mean this.
• 35:49
  SPEAKER_00: I mean this because I love you guys.
• 35:51
  SPEAKER_00: I want you guys to build wealth.
• 35:53
  SPEAKER_00: I want you guys to purchase a home the right way and not feel stressed.
• 35:57
  SPEAKER_00: A soft inquiry generally does not affect your credit score, but a hard inquiry does.
• 36:03
  SPEAKER_00: So don't be afraid to check your credit.
• 36:05
  SPEAKER_00: Don't be afraid to compare mortgage lenders and don't let somebody pressure you into applying for credit without understanding what you're authorizing.
• 36:16
  SPEAKER_00: Ask the question.
• 36:17
  SPEAKER_00: Knowledge is power, especially when it comes to your money.
• 36:21
  SPEAKER_00: Now, I want you to take a few minutes.
• 36:23
  SPEAKER_00: I want you to take a few minutes this week and review your credit report.
• 36:27
  SPEAKER_00: You can visit andyourcreditreport.com to access your credit report from three major credit report agencies, which I went through.
• 36:35
  SPEAKER_00: And if you're planning to purchase a home, start and having a conversation with the mortgage professional early so they can get you ready to purchase your home and get repaired before you start shopping for home.
• 36:46
  SPEAKER_00: Don't get excited for licking homes and then you next thing you know, you can't afford the home.
• 36:51
  SPEAKER_00: Because the last thing you want to do is find that perfect home and discover that the financial decision you made earlier has complicated your mortgage approval.
• 37:00
  SPEAKER_00: Talk to your lender.
• 37:01
  SPEAKER_00: Okay.
• 37:02
  SPEAKER_00: So my military real estate rookie listeners, my call to action to you.
• 37:08
  SPEAKER_00: And if you're listening, think about buying or selling a home in a Georgia, Florida area.
• 37:12
  SPEAKER_00: I would love the opportunity to help you, you know, navigate through that real estate journey.
• 37:17
  SPEAKER_00: Whether you're a first-time homebuyer, a veteran, a military family, preparing relocation, somewhere looking to make your next real estate move.
• 37:26
  SPEAKER_00: Let's connect.
• 37:27
  SPEAKER_00: Follow me on RenaBerry Real Estate.
• 37:30
  SPEAKER_00: I have some great information on there.
• 37:32
  SPEAKER_00: And I share real estate information, tips, insights to help you make more informed decisions.
• 37:37
  SPEAKER_00: I give you real, real information that I go through as a realtor with my clients.
• 37:43
  SPEAKER_00: And you can also contact me directly at Renaber Real Estate at gmail.com.
• 37:48
  SPEAKER_00: You can D DM me, send me a message and tell me what are you planning to do?
• 37:53
  SPEAKER_00: Let's talk about your real estate needs and what your goals are.
• 37:56
  SPEAKER_00: And if you're moving outside of Georgia or Florida, don't hesitate to contact me.
• 38:01
  SPEAKER_00: I can help you connect you with real estate professionals like me to help you.
• 38:07
  SPEAKER_00: So before you go, please follow, subscribe to my Military Real Estate Rookie show.
• 38:13
  SPEAKER_00: And I'm hoping that you enjoy this show because I want real give you real information for real clients, real people.
• 38:21
  SPEAKER_00: Leave us a review, share this episode with a friend, and send it to somebody who is preparing to buy a home or just want the information.
• 38:30
  SPEAKER_00: It doesn't hurt.
• 38:31
  SPEAKER_00: You never know who needs this to hear this information.
• 38:34
  SPEAKER_00: And remember, your credit report and your credit is part of your financial story, but it doesn't define your future.
• 38:40
  SPEAKER_00: Now, my military real estate rookies, Arena, your realtor.
• 38:46
  SPEAKER_00: I am in Georgia and Florida.
• 38:48
  SPEAKER_00: And until next time, keep learning, keep planning, protect your credit, and keep building your future.
• 38:56
  SPEAKER_00: One smart financial decision at a time.
• 38:59
  SPEAKER_00: You're already ahead because I gave you guys this information.
• 39:03
  SPEAKER_00: And I want you to succeed in building wealth.
• 39:07
  SPEAKER_00: And I want you to get this information so you can get smarter and you can learn, you can navigate through this whole process when it comes to buying a home.
• 39:17
  SPEAKER_00: It can be a little scary and it can be a little confusion.
• 39:22
  SPEAKER_00: But I hope with all these podcasts that I do, I want to educate you guys on the process and the ins and outs and the terminology and all of that.
• 39:34
  SPEAKER_00: So, all right, my military real estate rookies, I'll see you on the next episode.
• 39:40
  SPEAKER_00: Rena Baron out.
• 39:42
  SPEAKER_00: Enjoy.
• 39:43
  SPEAKER_00: Bye.