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Question Number 1  How soon after a lender requests your credit report does the hard inquiry lower your lender’s FICO scores?


FICO scores are very time sensitive. These scores look at months, not days, in determining time for numerous calculations. There is a particular time each time when FICO scores turn the page from one month to another month. It is the beginning of each new month that these calculations are all updated. I call it the FICO monthly transition point. 


Why is this so critical? It is when all time sensitive issues are updated for the month. At the beginning of each new month, hard inquiries are updated and impact the FICO scores. There are two points to understand.


1. Lenders have pulled a client’s credit report multiple times within a month. Does that mean if the credit reports are not requested at the same exact day that the lender who pulls the client’s credit report the following day is going to have lower FICO scores? 


No. The same FICO score (s) that was requested by the lender the previous day is the same FICO score (s) given the following day. Lenders see this hundreds of times each day. So why didn’t the second lender’s FICO scores drop on the following day? Because the impact from the hard inquiry does not impact the FICO scores until the beginning of the following month (all things remaining equal in the two credit reports). 


2. FICO reason code 8 is “Too many inquiries last 12 months”. What is the last 12 months? Is it 12 months from today’s date when your credit report is pulled? Say it is the 10thof January. Is it all inquiries  from January 11th last year to January 10th this year? It is the beginning of each month. Your FICO score goes back to the 12 “completed” months and those inquiries impact and lower a FICO score.


The number of hard inquiries is updated at the monthly transition point, or at the very beginning of the following month.  This is when the average account age, the number of new accounts, the time since delinquency, the time since derogatory public records and collections, along with other time calculations, are updated in the number of months for FICO scores.



Question Number 2 - Increases in purchasing power (and / or lower mortgage interest rates) are determined by your mortgage lender in increments of how many Classic FICO Score points?


It is 20 points from 580 to 800. The same interest rate is given for example to a consumer who has a 660 and a 679 (not a 680 score), a 680 and a 699 (not a 700 score), and a 720 and 739 (not a 740 score). 



Question Number 3 - There are two borrowers on a mortgage application. Borrower A has FICO scores of 650, 681, and 693. Borrower B has FICO scores of 696, 701, 713. Which FICO score is used for their loan approval and interest rate?


It is the lowest middle score of both borrowers. The middle score of Borrower A is 681. The middle score of Borrower B is 701. It is the lower of these two scores, or 681 in this example. 



Question Number 4 - An individual is trying to reestablish credit after a period of derogatory marks and no recent loan activity. Which one of the following statements is true about credit cards and FICO scores (Everything considered equal)?


It is opening an American Express credit card will increase FICO scores more than opening  Security Service Credit Union credit card. Why? No disrespect to Security Service Federal Credit Union and any other credit union. Bank credit cards hold more value to the Classic FICO score than a credit union credit card. Open an American Express card and it will boost your Classic FICO scores higher than any other card – all things considered equal. It comes from FICO reason code 15 – “Lack of recent bank / national revolving information.”

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