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  1. A mortgage (credit report) inquiry is different than a regular hard inquiry. A home buyer can have his / her credit report pulled by multiple mortgage lenders within how many days in order to have all mortgage inquiries count as only one inquiry in the (mortgage) Classic FICO credit scores?

  1. 7 days
  2. 14 days
  3. 30 days
  4. 45 days 

  1. A potential homebuyer increases his / her (mortgage) Classic FICO® credit scores from 679 to 680, Applying for a 5% down, 30-year conventional mortgage, how much by percentage does that change in credit score improve the homebuyer’s purchasing power?

  1. 0%
  2. 1.2%
  3. 3.1%
  4. 7.7%

  1. The majority of auto lenders use which credit score model to approve their auto loans?

  1. Vantage Credit Score (Credit Karma)
  2. FICO 8 Bankcard (Discover)
  3. FICO 9 (Experian)
  4. Classic FICO credit scores (My Credit Plan)

  1. A consumer increases his / her (auto) credit score from 679 to 680. Applying for a 6 year auto loan with nothing down, how much by percentage does that change in credit score improve a consumer’s purchasing power?

  1. 0%
  2. 1.6%
  3. 3.0%
  4. 5.5%

Question number 1

Hard inquiries lower credit scores. A mortgage (credit report) inquiry is different than a regular hard inquiry. A home buyer can have his / her credit report pulled by multiple mortgage lenders within how many days in order to have all mortgage inquiries count as only one hard inquiry in the (mortgage) Classic FICO credit scores?

FICO states:

“If your FICO Scores find some, your scores will consider inquiries that fall in a typical shopping period as just one inquiry. For FICO Scores calculated from older versions of the scoring formula, this shopping period is any 14 day span.”

Multiple mortgage inquiries from shopping for a mortgage, as long as they are within 14 days, all count as one hard inquiry. If additional mortgage inquiries are requested by mortgage lenders, each one will count as an additional hard inquiry. 

The 14 day period starts with the first one and goes 14 days.

Question number 2

A potential homebuyer increases his / her (mortgage) Classic FICO® credit scores from 679 to 680, Applying for a 5% down, 30-year conventional mortgage, how much by percentage does that change in credit score improve the homebuyer’s purchasing power?

Let’s look at 2 potential homebuyers – one with a 680 credit score and a second with a 679 credit score.

30 Year Fixed Rate Mortgage with 5% Down Payment

                                    Buyer A                                    Buyer B

Credit score                  680                                          679

Interest Rate                 4.00%                                       4.25%

Mortgage Loan             $300,000                                  $278,440

30 Year Payment           $1,432.25                                 $1,369.75

Mo. Mortgage Ins.        $245                                         $307.5

Total Payment              $1,677.25                                 $1,677.25

Increase in Purchasing Power -  300,000 divided by 278,440 is 7.7% increase.

Buyer A has a 680 credit score and Buyer B has a 679 credit score. Buyer A gets a 4.00% interest rate while Buyer B has a rate increase from the lower credit score that puts the interest rate at 4.25%.

The mortgage insurance on the loan is different in both situations. For a $300,000 mortgage, the mortgage insurance on Buyer A is $245 a month. The mortgage insurance for Buyer B is $307.50 because of the 679 credit score.

Payments in both scenarios is $1,677.25.

The difference in loan amounts for the same payment is a 7.7% increase in loan amount – or purchasing power.

Question Number 3       T

The majority of auto lenders use which credit score model to approve their auto loans?

About 70% of all auto lenders use the Classic FICO credit scores (goes to 850) found at My Credit Plan, to approve their auto loans. About 30% of auto lenders use the FICO 8 Autoscore which goes to 900. This is according to the largest credit agency who compiles credit reports for all types of lenders.

Question Number 4

A consumer increases his / her (auto) credit score from 679 to 680. Applying for a 6 year auto loan with nothing down, how much by percentage does that change in credit score improve a consumer’s purchasing power?

72 Month Fixed Rate Loan with 0% Down Payment

                                    Buyer A                                    Buyer B

Credit score                  680                                          679

Interest Rate                 4.49%                                       6.24%

Auto Loan                     $30,000                                    $28,531

Total Payment              $476.08                                    $476.08

Increase in Purchasing Power -  30,000 divided by 28,531 is a 5.1% increase in purchasing power.

Buyer A has a 680 credit score and Buyer B has a 679 credit score. Buyer A gets a 4.49% interest rate while Buyer B has a rate increase from the lower credit score that puts the interest rate at 6.24%.

Payments in both scenarios is $476.08.

The difference in loan amounts for the same payment is a 5.1% increase in loan amount – or purchasing power.

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