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If you want to get a personal loan, business loan, auto loan or any other loan, your credit score is of great importance. If you still don’t know, new credit is one of the core factors that will establish your score. Once your credit score is being calculated, 10 percent of your score will be accounted from the latest credit in your report. With your new credit added, hard inquiries are being expected to happen. This is why removal of such hard inquiries is a sure way to help you boost your credit score.

What is “Credit Inquiry” in the first place? It is displayed whenever a company wishes to get a copy of someone else’s credit report for whatever purpose it may serve them. These inquiries are categorized into two which is the hard inquiries and soft inquiries. Hard inquiries are those that will count against your credit score which could be caused when you are applying for another new personal credit in a bank or any credit card and finance company. To make it more specific, hard inquiries are the effect when you have to borrow money for any purchases and other loans like cars and boats. Whereas soft inquiries are not really a cost to your credit score.

So in order to obtain higher credit score, an inquiry removal and credit repair is highly recommended so as to remove as many hard inquiries as possible. Although there are inquiries that will not be counted against your credit score since it is just inquired by businesses not related to any credit application of yours. Other inquiries that are exempted from being counted against your score are those made by companies with whom you already have an existing credit account. All these inquiries will still be seen in your report but has nothing to do to affect your credit score.

How Credit Inquiries Affect Your Credit Score

Your FICO credit score can or cannot be affected with new credit inquiries. One inquiry will not at all drop in any way but there are others that are lowered by a few points. To avoid dropping off of your credit scores, you must be careful on where you apply for your credits and shun away from shopping everywhere for an extended period of time. Why? It is because many companies are sending credit check through a number of finance companies to look for the best interest rate. This may greatly harm your credit score since finance companies will show an inquiry into your credit report.
What you also have to be cautious about are the inquiries made by companies without any permission from you. So to avoid this, you have to get help to remove such unauthorized inquiries. (see difference between hard inquiries and soft inquiries)

Advantages that Inquiry Removal Offers

To successfully and extremely boost your credit score, inquiry removal is the best option. May it be a few points or large points; it will affect your capacity to acquire a loan. Removal of inquiries will also permit you to get better auto loan or mortgage interest rates as well as an opportunity to obtain credit for either personal or business purposes. Having to remove just 10 inquiries can give you up to 50 more points!

You can choose to consult a credit repair specialist to help you with your credit scores. You may find them online or in credit repair assistance companies.

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FICO is a scoring system usually used in the United States to aid you in determining how your credit scores are being calculated. To understand the calculation better, here is a brief explanation:

Your payment information is where thirty five percent of the calculation comes from and based on. Any disapproving information that causes negative effect on your credit score, like late payments and judgments, will all be checked by the system. Another factor that the FICO carefully looks at is the age of the occurrence to know how least or worse it can affect your credit score. While the other thirty percent is on the type of debt you have and the amount of money you indebted.

For the plastic debt or revolving debt, the calculation is centered on the disparity between the balance owing and the available credit. The smaller the difference between the two the more it will hurt your score and rating. Plastic debt is a type of debt that any credit or store card is considered.

Two more types of debt being checked by FICO includes the installment debt, where you are making reimbursement over a period of 30 to 60 months, and the open debt (the least common among the types) which is paid in full every month.
The calculation of another fifteen percent is based on your credit history. It is where the FICO reviews the length of time that you’re credit has been used based on when the oldest account has been opened.

The other ten percent is based on the spread or range of your credit. To make your score better, you must have more variety on the credit you have. The more you use your credit for different kinds of loan and mortgage, the more positive it will put in your credit score.

And lastly, inquiries made in your credit report contribute to the remaining ten percent of the calculation. These are the inquiries by companies or lenders to get a background check of your credits. The lower the inquiries the better since having many inquiries will initially give an impression that you are in a financial problem.

How Your FICO Score Is Calculated

FICO Score is calculated based on the credit report of the borrower wherein financial activities are being recorded. Such financial and credit information is being mathematically formulated to come up with the 3-digit FICO score usually between 300 to 850. 35% of the calculation is based on the payment history, the other 30% is based on debt ratio, 15% from credit history, 10% from the credit type and the remaining 10% from credit inquiries.

You have to be responsible enough to check once a year your credit report just to make sure that there are no errors and any misinformation in the report that would definitely cause negative effects on your score. Also, doing the checking and monitoring will help you fix it as soon as possible.

Scores usually range from 300 up to 850, 300 being the bad score and 850 being the best. Borrowers have a score that is in between. There is significantly a number of people who are in the 720 score which of course get better terms and rates for their loans. Most of the time, those with 600 below score have a higher interest rates.

Out of the many rating systems, FICO score is one of the mostly used. It is important that when you check your rating you have all the information that you need in order to maintain a good score. You also get the chance to see what lenders think about you.

You can actually request a copy of your credit report for free, through online websites. It will only take you a minute or two to get a detailed copy of your FICO score.

There are some things that you need to strive for in 2011, if you want to get approved for a mortgage with a good interest rate. Most lenders use a credit score designed by Fair Isaac Corporation (FICO) so that they can assess your credit risk. Using the FICO score as basis the ideal credit score for an approved mortgage loan is from 650 and above but if you are aiming for the best rates then you need a 760 or above.

Although your credit score may play a great part in whether your mortgage will be approved the final decision lies on your lender. Some lenders will still approved your mortgage even if you have a 500 credit score but they will ask you to produce additional documents such as bank statement and W2 to support your application. You need to pay a higher interest rate though. Not all lenders use FICO scores for their lending decisions. Some use Scorex and other FICO scales to fit their specific method of risk assessment. Keep on top of your risk factors by paying on time so that you will have more credit options.

Lenders still consider other factors such as:

• Employment and Salary. You will need a certain level of income. Lenders have different guidelines for the minimum salary that you may have to avail of the mortgage.
• Savings.
• Debt-to-income ratio. This ratio indicates how much money you pay toward your debts each month in relation to all of your income. Being debt free guarantees can boost your chances of being approved for the mortgage.

Mortgage under writers are not just concern about your income but also your expenses as well. If you have recurring monthly expenses like an educational loan then your chances of being approved is nil so better pay them first before applying for a mortgage.

1. Down payment. The amount that you need to make as down payment can be anywhere from 5% to 20%. This will be needed during the final approval. The lender will check your bank statement to make sure you can afford it.

Your mortgage budget is from 28% to 35% of your gross (pre-tax income) with this as your basis you will be able to know whether you can afford a mortgage.

If it is your first time to apply for a mortgage here are some terms that you need to familiarize yourself with:

Pre-qualification stage. After your finances are reviewed the pre-qualification application is done so that your lender will know how much you can afford to borrow. There is no guarantee that your loan will be approved during this stage.

Pre-approval stage. An in depth review of your financial history. You are required to file a mortgage application which takes place before you have selected a home. This is non-binding like the pre-qualification stage.

Approval stage. This is the final phase after you have chosen a home and made an offer. A home appraisal is needed during this phase.

You can apply for a pre-approval before you hire a real estate agent or even before you shop around for a house. The main reason for this is that you are showing your sellers that you are capable of buying their home.