Q: I shopped around to find my new car. Everything went well, but I was confused because each time my credit was pulled I got a different score! Is that normal?
A: It is completely normal for your score to vary. There are three different credit bureaus and not all creditors report to all three. Depending on who is pulling your credit, they may be getting a slightly different picture of your payment history. Also, scores are weighted differently based on who is pulling them. For instance, car dealerships may put more importance on your history of repaying auto loans as opposed to other types of credit.
Q: Follow up: Is it going to hurt my score that I had four credit checks in two days?
A: The credit bureaus have also become more sophisticated when it comes to consumer shopping. If you have a few credit pulls within a quick timeframe for a similar request, they will count them as one inquiry. Hope you are enjoying the new car!
Q: I just got promoted to Sergeant and I’m thinking of treating myself to a new motorcycle. I want to make sure I get the best rate available. How soon will my credit score reflect the raise in my salary?
A: Congratulations on your promotion! Surprisingly, your credit score does not factor in your income. While things like payment history, amounts owed, length of credit and percentage of new credit all contribute to your score, the credit bureaus don’t receive salary information. Your lender will still review your income if they calculate your debt to income ratios, but the pay bump will not have an effect on your score.
Q: My brother has been a bit down on his luck and needs some help getting back on his feet. He just got a new job that’s a quick walk from his house, and he also found a used car at a reasonable price. He’s asking me to co-sign for him, so he’ll have a way to run errands and get around. He has promised me that he’ll make all the payments, so it won’t impact my credit, right?
A: It is admirable that you want to help your brother, but co-signing for a loan will absolutely have an effect on your credit. Even though you and your brother know that the obligation is his, on paper you are equally responsible. The auto loan will show up on your credit report and if his circumstances change and he’s unable to pay, you will be on the hook! It sounds like your brother is on solid footing with a new job that’s conveniently close. Instead of offering to co-sign, which is a long and substantial commitment, you could offer to give him rides to the grocery store once a week and help with errands until he’s able to secure financing on his own.
Q: I signed up for a new credit card because it had a great balance transfer rate. Now, I’ve been getting a ton of pre-approval notices and offers in the mail? Are all of these card companies pulling my credit, and if so, does that hurt my score?
A: These offers are the result of “soft pulls” that lenders can do without impacting your credit. They don’t have any bearing on your score and they don’t show up as inquiries on your credit report.
These are just a few of the common credit questions that we hear. If you have personal credit questions, please check with a professional before taking any action. Your credit score is an asset that deserves your attention and protection!
Gwendolyn M. Hawkins is a Certified Credit Union Financial Counselor with over 20 years of experience in the credit union industry. Her services are offered in Chicago Patrolmen’s Federal Credit Union's Financial Planning and Education Center. Her services are free to members of CPFCU.
*This article was printed in the Chicago FOP 7 Magazine Q1 2016