How Long Does a Paid Off Loan Stay On Your Credit Report?

If you've paid off your loan, you might be wondering, how long does your paid off loan stay on your credit report? We will answer this question in much detail below.

How Long Does a Paid Off Loan Stay On Your Credit Report?

A paid off loan that is in good standing stays on your credit report for 10 years, boosting your credit score. However, a loan that has been paid off but has a delinquency such as a late payment remains on your credit report for 7 years from the date of the first delinquency or missed payment. So, even if you paid off your loan, it will remain on your credit report for years after it has been paid off. That said, the impact it has on your credit score will begin to lessen as the paid off loan ages and eventually falls off your credit report.

Paid off loans remain on your credit report for years after you've paid them to off to serve as a guide to future lenders and creditors as to how you managed debt in the past. If you've managed it will, the record will remain on your credit report for 10 years. However, if you've made late payments or missed payments, the paid off loan account only remains on your credit report for 7 years from the date of your first missed payment.

People often mistakenly believe that only active accounts stay on your credit reports, but the truth is that even accounts that are paid off, such as loans, remain on your credit report for long after the account has been paid off or closed. Any notes, negative or positive, remain on your credit report for years after the loan or account has been paid off or closed. Even credit cards remain on your credit report for years, long after you've paid them off.

Why Do Paid Off Loans Remain On Your Credit Report After They Have Been Paid Off?

Paid off loans and credit cards stay on your credit report for years after you've paid off to serve as a record for future lenders and creditors, showing them how you've handled paying off your debts. If you've made all of your loan payments on time, your closed loan account will continue to appear on your credit report for 10 years after you've paid it off, serving as a record to future lenders that you're capable of repaying your debts as originally agreed upon between you and your lender.

However, if you've missed even a single payment on your loan and had a late payment reported on your credit report, the loan will only appear on your credit report for 7 years from the date of the first missed payment. Loans with missed payments are reported on your credit report for 7 years to show lenders that you've missed a payment on your loan account, serving to show them how you've handled repayment of your loan.

Can You Remove a Paid Off Loan Account From Your Credit Report?

If you have a paid off loan that's in good standing, you should not attempt to have it removed from your credit report. This is so because paid off loans in good standing continue to help your credit score long after they're paid off. Also, they serve as evidence that you've responsibly handled paying off your debt, which is something that lenders like to see. So, the paid off loan may help you obtain future loans, credit cards, auto finance, and other types of debt.

That said, if you have a paid off loan where the account is not in good standing because of late payment or other negative items, you can try to dispute the account to have it removed from your credit report. However, disputing a valid paid off loan account that belongs to you and has no inaccurate information reported is difficult if not impossible to remove.

Only paid off loans where there is some incorrect or inaccurate information can be removed from your credit report. As soon as you file a dispute, the credit bureaus have 30 days during which to conduct an investigation to verify the accuracy of the information being reported to them. If the investigation reveals that something is incorrect the paid off loan may be removed from your credit report. However, if the investigation reveals that the information is accurate, the credit bureaus will not remove it from your credit report.

To check your credit report, you should request a copy of your credit reporting the three major credit reporting bureaus (Experian, Equifax, and Transunion). There are plenty of free and paid services online that will allow you to review a copy of your credit report. A quick Google search for "check credit report " will provide you with dozens of options to choose from. Make sure to select a known service provider to avoid theft of your personal information.

How Long Does It Take For a Paid Off Loan to Appear On Your Credit Report?

When you pay off a loan account, it can take up to 30 to 45 days for your lender to report your account status to the credit bureaus. Usually, lenders report your account status to the credit bureaus at the end of your billing cycle. So, it could take up to 30 to 45 days for the status of your account to be updated on your credit report. It could take significantly less depending on where you are in your billing cycle.

Why Did Paying Off My Loan Lower My Credit Score?

Paying off your loan can cause a drop in your credit score for several reasons, let's explore those reasons:

  1. Credit Mix - Paying off a loan effectively closes an installment account, which can reduce your credit mix (diversity of accounts, credit cards, mortgage, student loan, etc.). Whenever you pay off a loan, you're effectively closing an account thereby reducing the diversity of debt accounts that you have on your credit report, which can lead to a slight and temporary reduction of your credit score.
  2. Only Account With a Low Balance - Paying off a loan typically means that you've closed an account that had a low balance. Closing an account with a low balance can lower your credit score. So, this might be the reason for the small drop in your credit score. This is so because your credit utilization accounts for 30% of your credit score, the lower your credit utilization or usage, the better your credit score will be because it impacts your score. However, continue to make payments on your other accounts and your credit score should rebound within a short period of time.
  3. Other Reasons - Even though you may attribute the drop in your credit score to paying off your loan, your credit score may have dropped for a variety of other reasons, such as increasing balances on your other accounts, or applying for credit cards and loans even if you're not approved. That said, keep in mind that small drops in your credit score are normal, and so long as you continue making your payments on time and paying down your account balances, your credit score should recover quickly.

How Long Does It Take For Your Credit Score To Go Up After Paying Off a Loan?

Paying off a loan can actually temporarily lower your credit score because it may decrease your credit mix, especially if it's the only installment account that you had on your credit report. Additionally, your credit score may go down after paying off a loan because it increases your credit utilization. This is especially true if your loan was substantially paid off when you made your final payment. That said, if you noticed a slight drop in your credit score without any negative marks on your credit report, chances are that the drop is temporary in nature and your credit score will rebound within a short period of time. The amount of time it takes your credit score to go up depends on how you handle your other debts, whether you make your payments on time, how much more debt you accumulate, and whether you apply for new accounts. If you simply continue to make your payments on time and reduce your debt, your credit score should recover within just a few months.

If you have any general questions or comments about how long a paid off loan remains on your credit report, please feel free to leave them in the comments section below.


Do Store Credit Cards Build Credit?

You've probably been to a department store where you've been offered to apply for a store credit card in exchange for a huge discount, and so you might be wondering do store credit cards build credit? We will answer this question in much detail below.

Do Store Credit Cards Build Credit?

Some store credit cards do help build credit because they report your account status to the credit bureaus (Experian, Transunion, and Equifax), however, not all store credit cards will help you build credit. Store credit cards that don't report your account status to the credit bureaus will not help you build credit. Research the specific store credit card to determine whether it builds credit before applying.

If your store credit card reports to the three major credit bureaus, your store credit card will help you build credit so long as you use it responsibly by making all of your payments on time and keeping your account balances low.

That said, you should be aware that only credit cards build credit, rewards cards, membership cards, and other forms of rewards cards that help you accumulate points will not help you build credit.

Here is a list of some store credit cards that will help you build credit:

  1. Amazon Credit Card
  2. Target RED Card
  3. Walmart Credit Card
  4. Best Buy Credit Card
  5. Kroger Credit Card
  6. Home Depot Credit Card
  7. Wallgreens Mastercard Credit Card
  8. Apple Credit Card
  9. Macy's Credit Card
  10. Starbucks Rewards Visa Credit Card

If the store credit card you're applying for reports your account status to the credit bureaus, your store credit card will help you build credit. Some store credit cards help you build credit because they do report your account status to the credit bureaus.

That said, if you apply for a store credit card that is co-branded with a large payment network, such as Visa, Mastercard, or American Express, there is a good change that your store credit card reports your account status to the credit reporting bureaus.

However, some smaller store credit cards may not report your account status to the credit bureaus. In this case, your store credit card will not help you build credit.

So, if you want to open a store credit card than help you build your credit, you should contact the card issuer before applying and asking them whether they report to the three major credit bureaus. If they do report the store credit card's status to the credit bureaus, your account will help you build credit if you use your credit card responsibly and make your payments on time.

It's important to note that some store credit cards that only work in the store that issued them do not report to all three credit bureaus or only report to one of the credit bureaus. So, when choosing a store credit card that will help you build credit, you should choose one that reports to all three credit bureaus.

How Do Store Credit Cards Impact Your Credit Score?

If you choose a store credit card that reports to all three credit reporting bureaus for it to help all three of your credit scores.

1. Pay Your Store Credit Card On Time - For your store credit to help your credit, you should ensure that you at least make your minimum payment on time. This is so because your payment history accounts for 35% of your credit score, so paying your credit card on time will definitely help your credit. That said, missing even a single payment on your store credit card can cause significant damage to your credit. So, make sure to pay your store credit card on time for the best impact on your credit score. Also, if you are clumsy like us and often forget to make your minimum required payment, most card issuers allow you to set up automatic payments, so that you can at least make the minimum payment to avoid hurting your credit.

2. Keep Your Balance Low - When you use your store credit card, you should try to keep your credit utilization (use of available credit) at or below 10% and never exceed 30%. If you use more than 30% of your available credit and you leave a high balance, you can lower your credit score. This is so because your credit utilization accounts for 30% of your credit score. So, keep your account balance for your store credit card to help your credit score. So, for example, if your store credit card has a $2,000 credit limit and you leave a balance on your credit card of $1,000, you're using 50% of your available credit. This can lower your credit score because credit bureaus factor in your credit utilization when calculating your credit score. So, avoid leaving a high balance on your store credit card.

3. Don't Apply For Too Many Accounts and Loans - Other than using your store card responsibly and making your payments, to build credit, you should refrain from applying for other credit cards and loans. This is so because each time you submit a credit card or loan application, a hard inquiry is added to your credit report, slightly lowering your credit score.

4. Assistance Making Payments - If for any reason, you're unable to make your payments on time, you should contact your store card issuer and ask them about your options. Some card issuers may be willing to work with you, allowing you to skip a payment or come to some sort of agreement as to how the balance is paid down. That said, if that does not work, you can try credit counseling services that are available to you, and they should be able to provide you with your options.

Should You Even Apply For a Store Credit Card?

It's often tempting when you're standing to check out at a store and the cashier tells you that you can get 30% off your entire order if you open a store credit card to apply for the store credit card to get the discount. But, you should keep in mind that merely applying for the store credit card may lower your credit score because a hard inquiry is added to your credit report when the store reviews your credit report to determine whether to open the account for you. That said, a hard inquiry will only remain on your credit report for two years, after which it's automatically removed from your credit report.

So, before you apply, you should ask yourself: what are the odds of you being approved? Do you meet the store credit card lending criteria? If you have excellent credit, your chance of being approved is very high. However, if you have bad credit, applying could further lower your credit score. So, keep this in mind before even applying. If your reject, the hard inquiry will still appear on your credit report, alerting future lenders that you've been seeking credit.

You may benefit from opening a store credit in terms of the benefits you get by becoming a cardholder as many store credit cards offer unique benefits to their cardholders, such as discounts and early access to some items that are not available to persons without the store card. So, before applying you should consider whether the benefits offered by the store credit are worth applying for it.

That said, before opening a store credit card, you should consider the fact that store credit cards often have a higher interest than regular credit cards. So, if you are planning on leaving a balance on your store credit card, you should know that you will be paying more interest on the card balance. This is something to keep in mind as it could negate any discounts that you receive as a cardholder.

Also, there are many rewards credit cards that offer points for purchases, so it's worth looking at whether the rewards and perks offered by your store credit card exceed those of a rewards credit card. If they do, then applying may make senses, but if they do not, you're better off using a rewards credit card than opening a store credit card.

At the end of the day, the decision is up to you. If you like the benefits offered by a store credit card, and you meet the requirements, there is nothing wrong with opening a store credit card. Just weigh the factors discussed above before doing so that you can make an informed decision.

Overall, a store credit card makes sense if the following apply to you:

  1. You frequently shop at the store, allowing you take full advantage of the benefits, rewards, and perks offered by the store credit card
  2. You can keep your card balance low to avoid paying high interest rates on the balance
  3. You want to take advantage of an interest-free period the card offers
  4. You pay off your balance in full at the end of each billing cycle

Frequently Asked Questions (FAQs)

1. Can store credit cards improve your credit?

Yes, store cards that report to the three major credit bureaus can improve your credit so long as you use your store credit card by always making your payment on time, and keeping a low balance on the card. However, not all store cards will improve your credit. If you want a store credit card that can improve your credit, you must select one that reports to the credit bureaus. As your card issuer whether they report the credit bureaus if you want a card that will help you build your credit.

2. Do store cards hurt your credit?

Applying for a store card can temporarily slightly hurt your credit and lower your credit score because when you apply for one, a hard inquiry is placed on your credit report. A hard inquiry can lower your credit score by a few points. That said, the imapct of a hard inquiry wears off after 12 months, and it's removed after 2 years automatically.

3. What store cards build credit?

Walmart, Target, Best Buy, Amazon, Starbucks, Home Depot, Walgreens, Apple, and many stores have credit cards that can help you build credit. Research the credit card you want before applying to see if that specific store credit card reports to the credit bureaus to help you build credit.

4. Can you get a store credit card with bad credit?

You may be denied if you have bad credit as most store credit cards require a credit approval. So, if you have bad credit, you could be rejected.


How Long Does It Take For a New Credit Card to Show Up On Credit Report?

If you just opened a new credit card, you might be wondering, how long will it take your new credit card to show up on your credit report? We will answer this question in much detail below.

How Long Does It Take For a New Credit Card to Show Up On Your Credit Report?

It takes anywhere from 30 to 60 days after your credit card account was opened for it to show up on your credit report. How long it takes depends on when your credit card billing cycle ends. Typically, at the end of your billing cycle, your account will be reported to the credit bureaus and will show up on your credit report shortly thereafter.

The amount of time it takes for a new credit card to show up on your credit report is dependent on your card issuer. This is so because the only way the credit bureaus will know that you've even opened a new credit card is from your card issuer reporting the new account to them. Every card issuer reports at a different time. That said, as soon as your card issuer reports the new account to the credit bureaus, the account will show up on your credit report.

After your account is reported on your credit report for the first time, you will notice that your card issuer will report the status of your credit card to the credit bureaus (Experian, Transunion, Equifax) on a monthly basis. If you make your payments on time, positive payment history will be reported, and if you are 30 or more days late on making your payment, a late payment notation will be added to your credit report, lowering your credit score.

Nevertheless, each card issuer updates your account status with the credit reporting bureaus according to its own schedule at different times of the month.

If for any reason your credit card account status is not reported on your credit report within 60 days of opening your credit card account, there are different reasons as to why your account did not appear on your credit report.

Let's explore some of those reasons:

1. Technical Issue - A technical issue may be preventing your account from being shown on your credit report. For example, your credit card issuer may be providing the credit bureaus with your account status, but your credit card may not yet appear on your credit report.

2. Incorrect Personal Information - When you applied for your account, there may have been an error in your name or social security number that's preventing the account from appearing on your credit report. So, even though your credit card issuer is reporting the account to the credit bureaus, the account may not be showing up on your credit report.

3. Participation - Your credit card issuer may not report your account status to the credit reporting bureau that you're checking your credit report with. Some credit card issuers only report to one or two of the credit bureaus. So, try checking all three of your credit reports. That said, before reviewing all three of your credit report, contact your card issuer and ask them which of the credit reporting bureaus they report information to.

4. Different Name - Some credit card issuers partner with other bank, so although you may be expecting a certain company name, the company reporting your information to the credit bureaus could be different than the name of the business you applied for a credit card with. Oftentimes, department stores partner with card issuers for their store credit card accounts.

What Should You Do If Your New Credit Card Does Not Show Up On Your Credit Report?

If your credit card is not showing up on your credit report, try reviewing your two other credit reports. This is so because your credit card issuer may not report your account status on the credit report you're reviewing. Hopefully, this will solve your problem.

If you reviewed all three of your credit reports, and your credit card account does not show up on any of them, contact your card issuer and verify all of your personal information with them. Verify your name, social security number, date of birth, and address to ensure that your account is properly reported on your credit report. Errors in your information could cause the account to not appear on your credit report.

If you've verified your information and everything looks good and your account still doesn't show up on your credit report, it may be that your card issuer does not report the status of your account to the credit bureaus. Contact your card issuer and ask them whether they report to the credit bureaus and which bureau they report your account status to.

Your Credit Card Account Appears On Your Credit Report But You Have No Credit Score

If your credit card account appears on your credit report, but you do not yet have a credit score, this is normal if you've never had any loans or credit cards under your name. If you've opened a credit card recently and have no other credit cards or loans on your credit report, it usually takes a few months for you to even have a credit score generated for you. This is so because your credit file does not have sufficient information on which the credit bureaus can use to calculate a credit score for you. Usually, your account has to be open for at least 3 to 6 months for you to obtain a credit score. Even if you do not have a credit score, use your account responsibly, make your payments on time, and a credit score will be generated for you within a short period of time.

Frequently Asked Questions (FAQs)

1. Does opening a credit card lower your credit score?

Applying for a credit card can cause a slight and temporary drop in your credit score because whenever you apply for a credit card, a hard inquiry is placed on your credit report, slightly lowering your credit score.

2. Why is my credit card not showing up on my credit report?

Your credit card may not be showing up on your credit report for a variety of reasons. It may not be showing up because the account has not yet been reported to the credit bureaus, there may be a technical issue stopping it from appearing, there may be an error in your personal information when you applied, or your credit card issuer does not report to the credit bureau you're checking your credit report with.

3. How long does it take for an authorized user's credit card account to show up on their credit report?

It can take up to 30 days for an authorized user's credit card account to show up on his or her credit report. It could take slightly longer depending on when the card issuer reports the new account to the credit bureaus.

4. What should I do if my credit card doesn't show up on my credit report?

If your credit card does not show up on your credit report, you should contact your card issuer and verify the personal information they have on your account. Additionally, ask them about their reporting policy and which credit bureaus they report to, if any. This should help you get a better idea as to why your credit card is not appearing on your credit report.


If I Cosign For a Car Does It Show Up On My Credit Report?

If you've cosigned on a car loan or can finance, you might be wondering whether the account will show up on your credit report and whether it affects co-signing affects your credit score? We will answer both of these questions in much detail below.

If I Cosign For a Car Does It Show Up On My Credit Report?

Cosigning for a car will cause an installment account to show up on your credit report and on the main borrower's credit report. Additionally, a hard inquiry will be added to your credit report when the lender reviews your credit report, slightly lowering your credit score. The effect that co-signing for a car has on your credit score mainly depends on how the primary borrower manages the loan account. If the primary borrower makes all of his or her payments on time, this will boost your credit score. However, if the borrower fails to make a payment or the account is sent to collections, this could cause significant damage to your credit score. As such, you should only cosign for a car if you know that the primary borrower is responsible enough to make his or her car payments on time.

Late Payments

Cosigning for a car can show up on your credit report and hurt your credit score if the primary borrower is more than 30 days late for making the payment on the account. If the primary borrower is 30 days late, a 30-day payment notation will be added to your credit report, significantly lowering your credit score. Additionally, if the borrower continues to be late on the account, a 60-day late payment notation and a 90-day late payment notation will be added to your credit report, lowering your credit score.

Repossession

Additionally, if the primary borrower fails to make payments on the vehicle, the vehicle may be repossessed causing a repossession to show up on your credit report. A repossession can significantly lower your credit score, as well.

Collection Account

Moreover, if the vehicle is repossessed and sold, you may be liable for the difference between what the car sold for and what's owed on the vehicle. If the outstanding balance is sold to a collection agency, a collection agency may add a collection account to both the primary account holder's credit report and the cosigner's credit report, lowering both of your credit scores.

So, at this point, it should be apparent that cosigning for a loan is a big responsibility. You should only cosign for a car if you know that the primary borrower is reasonably likely to make his or her payments on time.

CSP Pro Tip - If you cosign for a car, when a dealer submits a credit application to review your credit report, a hard inquiry is added to your credit report. A hard inquiry is not a derogatory mark, but it will cause a slight drop in your credit score (around 3 to 5 points). That said, hard inquiries only stay on your credit report for 2 years, after which they are automatically removed from your credit report. Experts agree that the impact a hard inquiry has on your credit score only lasts for 12 months.

Does Cosigning For a Car Help Your Credit Score?

Cosigning for a car can help your credit score and help you establish good credit so long as the primary borrower makes all of the payments on time. Missing a single payment on a car loan or car lease can cause significant damage to both the primary borrower's and cosigner's credit scores. Additionally, if you co-signed for a car, having a paid off car loan or car lease will build good credit as it shows future lenders and creditors that you've handled debt well in the past. Additionally, since co-signing for a car adds an installment account to your credit report, this improves your credit mix, having a good credit mix and raise your credit score because your credit mix accounts for 10% of your credit score.

Things to Consider Before Cosigning For a Car

Here are some things that you should consider before cosigning for a car:

1. Legal Liability - When you cosign a car loan, you are accepting complete legal liability for repaying the car loan in the event that the primary borrower does not repay the loan as agreed. If the primary borrower fails to repay the loan on time, late payment notations will be added to your credit report as a cosigner, lowering your credit score. Additionally, if the account is sold to collections, you will be liable for repaying collections from the outstanding amount that's due. So, keep this in mind before co-signing any type of loan, not just car loans.

2. Good Credit - In order to cosign for a loan and help the primary borrower qualify for a car loan, you must have good credit in order to be approved for the car loan. If you do not have good credit, you are unlikely to help the primary borrower to approved for his or her car loan.

3. Ability to Obtain Financing - If you co-sign a car loan, you should consider the consequences it has on your ability to obtain financing in the future. This is so because the car loan is reported on your credit report as if you had borrowed the money, increasing your debt-to-income ratio (DTI). A high DTI can prevent you from qualify for loans in the future as lenders consider this factor before lending you money.

4. Relationship - Another thing that you should keep in mind that's not related to your credit is your relationship with the borrower. Your relationship with the borrower could be strained if he or she fails to repay the car loan.

5. Divorce - Getting a divorce does not sever your liability for repaying the loan in the event that the borrower fails to repay the loan on time.

6. Negative Impact On Credit - If the borrower fails to repay the loan on time, bringing the account current will not erase the negative marks that are added to your credit report. Negative items often remain on your credit report for 7 years.

Should You Help Another Person by Cosigning for Auto Finance or Car Lease?

If you have a family member or trustworthy friend, and you're reasonably certain that they can afford the car loan or auto finance, and you're reasonably sure that they will repay the loan as agreed, then helping them is not a bad idea. Before becoming a cosigner, you should create a plan for repaying the debt before co-signing. We've provided you with the most important things that you should consider before becoming a co-signer. If it seems too risky for you, then avoid it. However, if you want to cosign, be sure you understand the legal responsibility for doing so.

Frequently Asked Questions (FAQs)

1. Who gets the credit on a co-signed loan?

If you cosign a loan, both the cosigner and borrower's credit scores will be affected. If payments are made on time, both credit scores will improve. However, if payments are missed, both credit scores will suffer.

2. Will cosigning affect my credit?

Yes, cosigning will affect your credit. It will have a positive affect on your credit if the payments are made on time. However, if the borrower misses a payment, both credit scores will suffer.

3. Can you remove yourself as a cosigner?

This depends on the terms of your loan agreement. Some lenders have procedures in place that you must follow to have a cosigner removed. But, you cannot have yourself simply removed because you no longer want to be a cosigner.

4. Will my credit score go up if I become a cosigner?

Your credit score will go up if you become a cosigner and the borrower makes all payments on time. If the borrower misses a single payment, this could cause significant damage to your credit score.

5. Do late payments affect a cosigner?

Late payments typically affect a cosigner. This is so because you're basically agreeing to be financially responsible for the loan in the event that the borrower fails to repay on time.


How Long Do Missed Payment Stay On Credit Report?

If you've missed a payment on a credit card account, loan account, home mortgage, on any other account, you might be wondering, how long do missed payments remain on your credit report for? We will answer this question in much detail below.

How Long Do Missed Payments Stay On Credit Report?

Missed payments will stay on your credit report for 7 years from the date that you became delinquent on your account or missed your payment. After the 7 year period, the missed payment (late payment) will be automatically removed from your credit report. Although 7 years may seem like a very long time for a missed payment to remain on your credit report, its impact on your credit score will begin to lessen as the missed payment ages. Additionally, even if you make your account current and continue to make your payments on time, the late payment will not be removed. That said, there are some things that you can do in the meantime to improve your credit score. For example, make all of your payments on time and reduce the balances on your accounts, and you should notice an improvement in your credit score over time.

When is Your Payment Considered a Missed Payment?

Typically, your payment is considered as a missed payment if it is more than 30 days past due. For example, if your payment due date is March 1, 2022 and you fail to make your payment before March 31st, 2022, your payment will be considered as missed, and your lender will likely report the payment as late on your credit report. The 30 days late payment notation will then appear on your credit report for 7 years from March 1, 2022, meaning it will be removed from your credit report on March 1st, 2029. We long this is a long period of time, but that's how long late payments remain on your credit report.

The same logic applies if you fail to make your payment on the following month. If you fail to make a second payment, a 60 days late payment will be reported to the credit reporting bureaus. The late payment notation will continue to appear on your credit report for 7 years from the date you first became delinquent on the account.

Remember, most lenders typically do not report your account as being paid late until you're 30 days past due. So, if you make your payment within the 30 day windows, it's unlikely that your account will be reported as being paid late. However, if you're more than 30 days late, your lender will most likely reported your payment as late on your credit report, causing a drop in your credit score.

How Do Missed Payments Affect Your Credit Score?

A late payment can cause a significant drop in your credit score. Typically, the better your credit, the bigger the drop will be. Yes, you heard that right. The better your credit, the bigger the drop will be. So, if you have excellent credit, you may notice a huge drop in your credit score, for example 100 or more points or more. Of course, this is different from one person to another.

That said, if you have poor credit, you've probably already done significant damage to your credit and so the point drop will not be as dramatic as someone who has never missed a payment. Also, you should keep in mind that missing several payments is much worse for your credit than missing a single payment. Additionally, missing payments on multiple accounts is much worse than missing payments on a single account. So, if you can still pay off your other accounts, you should continue to do so to avoid further damage to your credit.

Having said that, you should keep in mind that a missed or late payment will remain on your credit report for 7 years, after which it will be automatically removed from your credit report. However, its impact on your credit score will be the biggest when it is first reported on your credit report. As the missed payment ages, its impact on your credit score will begin to lessen until it's ultimately removed from your credit report.

The best thing that you can do to improve your credit after having a late payment reported is to continue making all of your other payments on time, and to reduce the balances on your account. Doing these two things ensures that your credit score recovers as quickly as possible.

Can You Remove a Missed Payment From Your Credit Report?

A valid missed payment cannot be removed from your credit report. It will remain on your credit report for 7 years from the date of the delinquency. Even if you make the late payment and continue making account payments on time, the late payment will remain on your credit report. You can only have a late payment removed from your credit report if you made the payment on time and it was reported as late or if the account does not belong to you. Other than these two situations, late payments cannot be removed from your credit report.

If you were not late, but a late payment was recorded on your credit report, you have the option of filing a dispute with the credit reporting bureau to have the late payment removed. The dispute process can take up to 30 days but it is usually performed within just a few business days, and you will have to provide evidence to prove that you indeed made the payment on time and that there is an error in what was reported to the credit bureaus.

How to Avoid Missing Payments?

If you want to avoid missing payments so that they're not reported on your credit report, you should setup reminders and alerts from your creditors and lenders so that you're alerted when your payment is due so that you can make them on time. Another method that you can use is to opt for automatic payments that are debited automatically from your checking or savings account, saving you the hassle of having to remember to make your payments on time. That said, with automatic payments, you should always ensure that there is sufficient money in your account to cover your payments. If you do not have sufficient money in your checking or savings account, your deposit account may be overdrawn to cover the payments, and you should avoid having your accounts overdrawn.

For example, for credit cards, you can typically setup automatic payments that will cover your minimum payment or a payment amount of your choice. This is one of the best ways to avoid having your credit card being hit with a late payment.

In the event that you do not have enough money to make your payments, you should contact your lender or credit as promptly as possible, and ask them about your options. Some lenders may allow you to skip a payment or two without having your account reported as late.

Frequently Asked Questions (FAQs)

1. Can I get a late payment removed from my credit report?

No, a valid late payment that belongs to you cannot be removed from your credit report. Only payments that were not actually late can be removed from your credit report.

2. How long does it take for a missed payment to fall off credit report?

A missed payment will fall off of your credit report within 7 years of you missing the payment. After the 7 year period, the late payment notation will automatically be removed from your credit report.

3. How much does a single late payment affect credit score?

A single late payment can drop your credit score by 100 or more points. The higher your credit score, the bigger the drop you will experience. The lower your credit score, the less of a drop because you may already have other negative items bringing down your credit score.

4. How to improve your credit score after missing a payment?

You can improve your credit by making all of your credit card and loan payments on time, reducing the balances on your accounts, avoiding applying for new credit, and keeping your old accounts open.

If you have any general questions or comments, please feel free to leave them in the comments section below. Thanks for taking the time to explore our content, we hope that you learned something new.


How to Change Address On Credit Report?

If you've made or changed your address for any reason, you might be wondering how can you change the address on your credit report. We will explain this in much detail below.

How to Change Address On Credit Report?

You can change the address on your credit report by updating your address on your credit card accounts, deposit accounts, and loan accounts. After updating your address with your financial institutions, they will report the new address to the credit reporting bureaus. The credit reporting bureaus will add the new address to your credit report. This process may take up to 45 days to complete. That said, you should be aware that your old addresses will still appear on your credit report and they cannot be removed unless they are not accurate.

If an inaccurate address appears on your credit report, you can have it removed by submitting a dispute to each of the credit reporting bureaus reporting the inaccurate address. After you file a dispute, the credit reporting bureaus will conduct an investigation to determine whether the address is inaccurate. If the investigation reveals that it is indeed inaccurate, it will be removed from your credit report. The process takes up to 30 days to complete, however, it's usually completed within a few days.

So, if you want to change your address on your credit report, all you have to do is update your address with your creditors and your creditors will report the new address to the credit reporting bureaus. There is nothing more than you need to do to change your address.

How Long Does it Take to Change Address On Credit Report?

It usually takes up to 45 days for your address change on your credit or loan accounts to change your address on your credit report. For example, if you update your address on your credit card account, it will take up to 45 days for your card issuer to report the new address to the credit reporting agencies. Once the new address is reported to the credit reporting bureaus, it will be reflected on your credit report immediately. Typically card issuers and financial institutions will report your account address, including address change once every 30 to 45 days. Some financial institutions report your account status more frequently. If you look at your TransUnion credit report, you will see a section titled accounted updated. This will indicate when your account status was last updated.

So, if you were wondering how you can change your address on your credit report, all you have to do is contact your creditors (credit card issuers and lending institutions) and update your address with them. Once they report your account status to the credit reporting bureaus, the update will contain your new address, which will be updated with the credit reporting bureaus and on your credit report. Of course, you will have to wait for your creditors to send the updated address to the credit reporting agencies for the address change to be reflected.

Does Changing Your Address On Your Credit Report Affect Your Credit Score?

No, changing your address and other personal information does not affect your credit score. So, whether you change your name, address, or any other personal information on your credit, it will have no impact on your credit score. This is so because the credit scoring models do not factor in personal information changes into your credit score. In fact, even if you were to change your address, your old address will still continue to appear on your credit report, as it will not be removed.

Is There a Wrong Address On Your Credit Report?

If there is a wrong address on your credit report, you can have it removed by filing a dispute with the credit reporting bureaus. After you file a dispute, they will conduct an investigation to determine whether the address on your credit report is incorrect. If the investigation determines that the address is incorrect, it will be removed from your credit report. However, if it reveals that the address is accurate it will remain on your credit report and cannot be removed.

You should always check your credit report to determine whether the information reported on it is accurate. If you find any information that does not belong to you, you should promptly file a dispute with the credit reporting bureaus reporting the inaccurate information.

If you have any general questions or comments, please feel free to leave them in the comments section below.

Frequently Asked Questions (FAQs)

1. How do I correct an incorrect address on my credit report?

If you have an old address on your credit report and want your new address shown on your credit report, you can only update it by changing the information on your accounts. After changing your information on credit and loan accounts, your creditors will update the information with the credit reporting bureaus. However, if there is an address that does not belong to you on your credit report, you should file a dispute with the credit reporting bureaus reporting the incorrect address to have it removed from your credit report. Your old addresses cannot be removed from your credit report unless they are inaccurate.

2. Can changing your address affect your credit score?

No, changing your address will never affect your credit score.

3. How do I correct my personal information on my credit report?

You can correct information on your credit report by filing a dispute with the credit reporting bureaus to have the incorrect information removed from your credit report. If your information has changed, update your information with your creditors and they will report the changes on your credit report.

4. Can I remove an old address from my credit report?

No, an accurate old address cannot be removed from your credit report.


How Long Do Credit Card Applications Stay On Credit Report?

If you've applied for a credit card, you might be wondering how long does the resulting hard inquiry from your credit card application stays on your credit report. We will answer this question in much detail below.

How Long Do Credit Card Applications Stay On Credit Report?

Credit card applications stay on your credit report for 24 months from the date that you submitted your credit application. After the 24 month period is over, the resulting hard inquiry will automatically be removed from your credit report. A hard inquiry from a credit card application will stop affecting your credit score within 12 months of submitting your application.

A hard inquiry is placed on your credit report whenever you submit a credit card application regardless of whether your application is approved or denied. A hard inquiry can lower your credit score by a few points, but so long as you make payments on all your accounts and avoid having anything negative added to your credit report, your credit score will quickly recover from a credit card application.

You should keep in mind that every credit card application you submit will result in a hard inquiry being added to your credit report. So, avoid submitting too many credit card applications within a short period of time. This is so because even though a single credit card application will lower your credit score by a few points, submitting too many within a short period of time can significantly lower it. Also, lenders don't like seeing too many hard inquiries on your credit report because it shows them that you're actively seeking too much credit.

How Many Points Can a Single Credit Card Application Lower Your Credit Score?

A single credit card application can lower your credit score by a few points. That said, the stronger your credit profile, the less of an impact there will be on your credit score. That said, it's common for a single credit application to lower your credit score by 3 to 5 points. That said, hard inquiries only make up 10% of your credit score, so they do not play a major role. Having said that, ideally, you should have no more than 2 to 3 hard inquiries on your credit report. If you have more than 3 hard inquiries, lenders may be hesitant to lend you money because it shows them that you're actively seeking credit, which is something that they do not like to see. So, keep your credit card applications to a minimum, and only apply for credit cards that you have a reasonable chance of being approved for.

If you know that you'll be applying for a mortgage in the foreseeable future, you should keep credit card applications and other credit applications to a minimum in order to have the highest credit score possible and for your credit report to look as clean as possible.

Things to Consider Before Submitting a Credit Card Application

You should consider the following factors before submitting a credit card application:

1. you should keep in mind that whether your application is approved or denied, a hard inquiry will be added to your credit report, so make sure that you're only applying for a credit card that you're reasonably certain you'll be approved for. There are many helpful sites on Google that will tell you the credit score requirements for the credit card you want to apply for, so review the requirements and compare them to where your credit score stands.

2. The better your credit score, the less of an impact submitting a credit card application will have on your credit score. If you have a low credit score and have too many hard inquiries, you could see a bigger drop in your credit score when submitting a credit card application.

3. Even though your credit score may drop a few points as a result of a credit card application, if you continue to make all of your payments on time, your credit score will quickly recover.

4. Review your credit report before applying. If your credit score is lower than what's required for the credit card you want, consider applying for a different card that caters to consumers with your credit score.

How Many Credit Card Applications Should You Submit?

As a rule of thumb, you should keep the hard inquiries that result from submitting credit card applications below three hard inquiries. Also, you should space out your credit card applications, leaving at least 90 days between submitting applications. If you submit an application and are denied, you should wait before submitting another application. Applying for a bunch of credit cards within a short period of time is a big no no and should be avoided. If you submit too many applications, lenders will view you as actively seeking too much credit, making them weary about whether to approve you. Additionally, you should space out applications so that the hard inquiries resulting from credit applications do not lower your credit score too much.

How Long Does a Credit Card Application Stay On Your Credit File?

As mentioned previously, a credit card application will stay on your credit file (credit report) for 2 years from the date you submitted your application and the lender reviewing your credit report. After the 2 year period, the resulting hard inquiry will automatically be removed from your credit report.

How To Improve Your Credit Score After Submitting a Credit Card Application?

If you want to improve your credit score after submitting a credit card application, you should make sure to make all of your credit card and loan payments on time. Missing a single payment could cause significant damage to your credit score. Additionally, you should lower the balances on your credit cards and loans. Your credit utilization accounts for 30% of your credit score, so paying down your cards and loans will improve your credit score. Furthermore, keeping old accounts open even though you barely use them is a good idea as your overall account age impacts your credit score. Moreover, you should limit the number of credit applications that you submit to keep hard inquiries at a minimum. Although a single hard inquiry can lower your credit score by a few points, having too many of them on your credit report within a short period of time can significantly lower your credit score. If you have any questions or comments, please feel free to leave them in the comments section below.


Are Hard Inquiries Considered Derogatory?

If you have had a hard inquiry added to your credit report, you might be wondering whether a hard inquiry is considered a derogatory mark. We will explain the answer to this question in much detail below.

Are Hard Inquiries Considered Derogatory?

Hard inquiries are not considered to be derogatory marks. Hard inquiries serve as a notification to future lenders alerting them that you've been seeking credit and a party accessed your credit report. They are not indicative of anything negative or wrong with your accounts, therefore, they are not derogatory. That said, a single hard inquiry can lower your credit score by just a few points (usually 5 points or less). Hard inquiries remain on your credit report for 2 years, and after the 2 year period, they are automatically removed from your credit report. Hard inquiries only impact your credit score for 12 months from the date they're added to your credit, after which they no longer bring down your credit score.

There are two types of inquiries that can appear on your credit report: hard inquiries which we just discussed above. The second type of inquiries that can appear is soft inquiries. Soft inquiries do not impact your credit score, and they indicate that a party has reviewed your credit report, but not for the purpose of extending credit to you. Soft inquiries are usually made when you check your own credit report or when a lender checks your credit report to pre-approve you for an offer, such as a credit card or personal loan.

Important Things to Remember About Hard Inquiries

Although hard inquiries can slightly lower your credit score, you should remember that they're temporary and the impact they have on your credit score is minimal. Hard inquiries account for 10% of your credit score, and having a hard inquiry added to your credit report usually only lowers your credit score by a few points.

Hard inquiries are typically added to your credit report when you apply for the following:

  • Credit card
  • Personal loan
  • Mortgage
  • Student loan
  • Car lease
  • Car finance
  • Any other credit or loan application

You should be aware that hard inquiries are added to your credit report simply for applying. You do not need to be approved for a credit card or loan in order for a hard inquiry to be added to your credit report.

Again, the impact a hard inquiry has on your credit score is small, as long as you make payments on your accounts and keep your credit utilization low, your credit score will increase within just a short few months.

What Should You Do If You Do Not Recognize a Hard Inquiry On Your Credit Report?

If there is a hard inquiry that you do not recognize on your credit report, there are a few things that you should do.

First, look at the information of the inquirer. Typically, you will find the name of the company that pulled your credit report, as well as their contact information. Contact them using the information on your credit report and ask them who they are and why they reviewed your credit report. Oftentimes, if you apply for a department store credit card, the department store may have a bank that they deal with and it could have been that bank that has requested to review your credit report. If the hard inquiry was because you applied for a credit card or other product, then there is nothing else that you should do.

However, if you did not authorize a third party to review your credit report and the hard inquiry does not belong to you, notify the inquirer that you did not authorize the inquiry, freeze your credit reports, and dispute it to have it removed from your credit report. You should freeze your credit because it may be indicative of someone trying to open accounts under your name, which is something that you do not want. You should freeze all three of your credit reports by contacting each of the three major credit reporting bureaus and freezing your credit to prevent any person from opening accounts using your information.

Here are some situations where you could have several inquiries on your credit report. If you're applying for a car loan, your auto dealer may have shopped around for the best loan amount and interest rate with several lenders. Every time one of these lender requests to review a copy of your credit report, a hard inquiry is added to your credit report. The same applies if you were shopping for a mortgage. That said, do not worry about several inquiries while shopping for a home or auto loan because all inquiries that are added to your credit report within a 14 to 45 day period are counted as a single hard inquiry.

Why Are Hard Inquiries Added to Credit Report?

Hard inquiries are added to your credit report to alert future lenders that you're actively seeking credit. Typically, you do not want to have more than 1 to 2 hard inquiries on your credit report. If a lender reviews your credit report and finds too many hard inquiries, it may be hesitant to open an account for you because it shows them that you're actively seeking credit and may too reliant on credit. So, only apply for accounts that you need and know you have a reasonable chance of being approved for. This prevents you for submitting too many applications within a short period of time.

What Marks Are Considered Derogatory Marks?

Now that you know that hard inquiries are not considered as derogatory marks, let's explore some notations that are derogatory and can appear on your credit report:

  • Late payments
  • Charge-off
  • Collections Account
  • Bankruptcy
  • Civil Judgment
  • Foreclosure
  • Tax Lien
  • Debt Settlement

These are all derogatory marks, and if they appear on your credit report they can cause significant damage to your credit score, often lowering it by 100 or more points. The amount of damage they do to your credit depends on what else appears on your credit report. But, as a rule of thumb, the better your credit score, the bigger the drop in your credit score.

Frequently Asked Questions (FAQs)

1. How many points does a hard inquiry lower your credit score?

A hard inquiry can lower your credit score by 3 to 5 points.

2. Are hard inquiries bad?

Hard inquiries can lower your credit score by only a few points, but there is nothing wrong with having them on your credit report. You should avoid racking up too many hard inquiries because it shows lenders you're applying for too much credit and may be overextending yourself. As a rule of thumb, you should have no more than 1 to 2 hard inquiries on your credit report.

3. Can you remove hard inquiries from your credit report?

You cannot remove valid hard inquiries from your credit report. However, if you did not apply and the hard inquiry is fraudulent, you can file a dispute to have it removed from your credit report. If the hard inquiry is valid, it will remain on your credit report for 2 years from the date your lender reviewed your credit report.

4. How many hard inquiries can you have on your credit report?

You can have an unlimited amount of hard inquiries on your credit report as there is no limit.


No Credit vs Bad Credit: Which is Worse?

Whether you're just starting to build credit or rebuild your bad credit, you might be wondering is it worse to have no credit or bad credit? We will answer this question in more detail below.

No Credit vs Bad Credit? Which One is Worse?

Having bad credit is worse than having no credit because with new credit, you have a clean slate on which to build good credit. However, with bad credit, you may have items on your credit report that will continue to bring down your credit score for years to come. So, having bad credit is definitely a much worse situation to be in than having no credit. This is so because when you're starting to build your credit, it is very easy and quick to establish good credit. Within just a few months of making payments on a credit card, you can achieve a credit score in the low 700s. However, if you have bad credit, it will be much more difficult for you to raise your credit score.

If you do not have good credit, creditors and lenders have no way to assess whether you're likely to make your payments on time, therefore, many lenders and creditors will be hesitant to lend you money. That said, there are lenders that are willing to take a risk on those who are just starting to build their credit.

Having no credit is better than having bad credit because, with bad credit, you have probably demonstrated that you've mishandled credit in the past. Therefore, creditors and lenders will be very cautious when deciding whether to lend you money. If they do decide to lend you money, they will charge you an extremely high-interest rate.

That said, regardless of whether you have bad credit or no credit, you will find it difficult to do the following things:

  1. Difficulty being approved for credit cards
  2. Difficulty being approved for loans
  3. Paying a security deposit on a utility account
  4. Payment of higher interest rates
  5. Lower credit limits if approved
  6. Difficulty being approved for a mortgage
  7. Difficulty obtaining housing if a credit check is required

These are some of the things that you may find difficult to do if you don't have credit or have bad credit.

Is Having No Credit The Same As Having Bad Credit?

No, having no credit is not the same as having bad credit. That said, people who have no credit or bad credit face some of the same issues, as discussed above. Nevertheless, they are two different situations. If you have bad credit, that means that you've made some major mistakes when it comes to managing your credit.

However, when you have no credit you have no experience ever managing credit, which makes you risky to lenders and creditors. As such, when you're beginning to build your credit, lenders are very hesitant to lend you large sums of money. When you have bad credit, lenders are also hesitant to lend you money because you've mismanaged credit in the past.

That said, it's easier to build credit when you're building on a new slate vs the situation where you have bad credit and may need to address past issues to improve your credit score. Also, bad credit is more difficult to overcome because you may have to wait for negative items to come off of your credit report for your credit score to improve.

What Do You Need To Have Credit?

So, now that we know that having no credit is better than having good credit, at what point do you have credit and a credit score? To have credit, you must have an open account for a minimum of six months, and the financial institution you have an account with must have reported your account to the credit reporting bureaus.

If you do not have a credit card or loan that has reported the activity to the credit reporting bureaus within the last six months, you may not have a credit score. For those of you wondering, if you do not have credit, you will not have a credit score of 0. Instead, you will get a notification that your credit score cannot be calculated because there is insufficient information in your credit report on which to calculate a score.

On the other hand, if you have bad credit, there probably is information based on which to calculate a credit score, but your score may be very low.

How To Go From No Credit or Bad Credit to Good Credit?

If you have no credit and you apply for a credit card to begin building your credit and you're denied, you should explore the option of opening a secured credit card. The same applies if you have bad credit and you want to open an account to begin rebuilding your credit. In both situations you should explore the option of a secured credit card. Secured credit cards are easier to obtain than regular credit card because of the way they work.

With a traditional credit card, the card issuer is taking a risk by issuing you an unsecured credit card without a security deposit. However, with a secured credit card, the lender is taking little risk because to qualify for the credit card, you must place a security deposit with the card issuer. The security deposit determines your credit limit.

For example, if you want a $500 credit limit, you would place a $500 security deposit with the card issuer, and the card issuer will provide you with a credit card with a $500 limit. If you use the card responsible for six to twelve months, the card issuer may return your security deposit to you and convert your account from a secured credit card to an unsecured credit card.

The great thing about secured credit card is that they impact your credit score just as would a regular unsecured credit card. So, if you make your payments on time and keep a low balance, you will improve your credit score. However, if you misuse the account, you could cause significant damage to your credit because your account status is reported to the credit bureaus the same way a regular credit card is reported.

Frequently Asked Questions (FAQs)

1. Why is bad credit worse than no credit?

Bad credit is worse than no credit because there are probably negative items that are pulling down your credit score. Some negative items may remain on your credit report for years, dragging down your score. However, when you're starting to build your credit, you have a clean slate based on which to open accounts and build good credit.

2. What is the credit score of someone with no credit?

A person who does not have credit will not have a credit score. When a person with no credit checks his credit report, he or she will probably get a message along the lines of there is insufficient information based on which to calculate a credit score.

3. How do you go from no credit to having credit?

You can go from having no credit to having credit by opening a credit card or taking out a loan and making payments on such an account. Within a few months of making payments on your account, you will provide the credit bureaus with enough information which they can use to calculate a credit score for you. As a rule of thumb, you should have an account open for at least six months to gain a credit score.

4. What happens if you have no credit?

If you have no credit, you will find it difficult to open a credit card, take out a loan, take out a mortgage to buy a home, finance a car, or lease a car. There are plenty of other things that you might find difficult to do without credit.


Do Multiple Mortgage Applications Hurt Credit?

If you are thinking about taking out a loan to buy a home, you might be wondering whether multiple mortgage applications will hurt your credit score? We will discuss the answer to this question in much detail below.

Do Multiple Mortgage Applications Hurt Your Credit?

Although multiple mortgage applications can hurt your credit score and lower it, applications made within a 14 to 45 day window while shopping for a mortgage will be counted as a single hard inquiry, only slightly lowering your credit score. Hard inquiries appear on your credit report whenever you're applying to borrow money and they remain on your credit report for 2 years from the date the lender reviews your credit report. Hard inquiries can slightly lower your credit score (by only a few points). That said, the credit reporting bureaus understand that many consumers shopping for home loans will apply with several lenders while seeking to obtain the largest loan amount at the best interest rate. Therefore, any inquiries incurred within a 14 to 45 day windows count as only one hard inquiry, slightly lowering your credit score.

Typically, when you go to a mortgage broker, the mortgage broker will apply for several home loans on your behalf. Each time a mortgage provider checks your credit, a separate hard inquiry will be added to your credit report. Each hard inquiry can lower your credit score by a few points. However, the credit reporting bureaus offer special treatment to those shopping for a mortgage, and therefore any hard inquiries placed while shopping for a home loan will only be counted as a single hard inquiry provided that they are made within a 14 to 45 day period, depending on what scoring model is used to calculate your credit score.

Hard inquiries can lower your credit score because they account for 10% of your credit score. The more hard inquiries you have on your credit report, the lower your credit score will be. Hard inquiries remain on your credit report for 2 years from the date that a mortgage lender reviews your credit report. After the 2 year period, they're automatically removed from your credit report. Experts agree that the impact of hard inquiries on your credit report begins to lessen as the hard inquiry ages. After 12 months, a hard inquiry should have no impact on your credit score.

The 14 to 45 Day Window

When shopping for a mortgage, most people shop around for the best mortgage. So, any mortgages that you apply for within a 14 to 45 day period are treated as a single hard inquiry on your credit report. The 14 to 45 day period depends on which credit scoring model that's used to calculate your credit score. Different models use different periods during which to county hard inquiries as a single hard inquiry. Typically, the newest scoring models count hard inquiries when mortgage shopping within a 45 day period as a single hard inquiry, offering shoppers some leeway when it comes to finding the right mortgage. So, when you're applying for 1 mortgage or applying for 10, all of the hard inquiries you rack up within a 45 day period are counted as a single hard inquiry when calculating your credit score.

Proceed With Caution

The 45 day mortgage shopping window only applies when shopping for home loans and auto loans. It does not apply to credit card applications. If you want to open a credit card and submit multiple credit card applications, each application counts as a single hard inquiry. So, if you submit multiple credit card applications, the 45 day grace period does not apply and each hard inquiry will lower your credit score, so please proceed with caution. So, if you submit too many credit card applications within a short period of time, you can significantly lower your credit score because each hard inquiry counts as a single inquiry, lowering your credit score. This is different from home loan applications where multiple hard inquiries are grouped into a single hard inquiry.

Should You Submit Multiple Mortgage Applications?

As previously mentioned, no matter how mortgage applications you submit within a 45 day period count as a single hard inquiry. So, feel free to shop around for mortgages, just make sure that all of your applications are submitted within a very short time frame so all applications and resulting hard inquiries only count as a single hard inquiry on your credit report. Shopping for a mortgage this way will only drop your credit score by a few points since multiple mortgage applications will count as only a single hard inquiry. When you're seeking to make a large purchase, such as a home purchase, it's wise to shop around for the best rates, so submit as many applications as reasonably necessary to obtain the loan amount and interest rate that you're looking for. Finding the right mortgage can save you a substantial amount of money, so shop around and rest assured that all applications submitted within the 14 to 45 day window will only count as a single hard inquiry.

That said, to get your mortgage applications within the 14 to 45 day period, it's helpful for you to make a list of potential lenders that you want to apply to before submitting a single application. This ensures that all applications result in a credit review within the 14 to 45 day period. Also, make a list of questions that you have for your lenders so that you can ask them and have them answered within a short amount of time.

Even if you submit applications outside the 45 day window, your credit score will not significantly suffer as hard inquiries only account for 10% of your credit score. 65% of your credit score, however, depends on your payment history and the balances you keep on your accounts. So, as long as you continue to make your payments on time and keep low balances on your credit cards and loan accounts, an extra hard inquiry is unlikely to cause much damage to your credit score.

How much does a mortgage application affect your credit score?

Whenever you submit a mortgage application and a lender reviews your credit report, a hard inquiry is placed on your credit report. A single hard inquiry can lower your credit score by just a few points. For this reason, the credit reporting bureaus treat multiple credit reviews performed for the purpose of obtaining a mortgage within a 45 day period as a single hard inquiry, only slightly lowering your credit score.

Here Are Some Things to Avoid When Applying For a Mortgage

You should avoid doing the following things when applying for a mortgage to keep your credit score as high as possible to qualify for the large mortgage amount and the best interest rates:

  1. Credit Applications - Do not submit other credit applications. Refrain from applying for auto loans, credit cards, and personal loans until your mortgage is approved and you're sitting comfortably in your new home. This ensures that no other hard inquiries lower your credit score.
  2. Do Not Miss Payments - Do not miss any payments on your credit cards, auto loans, auto finance account, personal loans, and student loans. A single missed payment can cause significant damage to your credit score. So, if you've never missed a payment, continue the good streak to ensure that you're approved for the best home loan at the best interest rate.
  3. Do NOT close accounts in good standing - If you have accounts that are in good standing because this could lower your credit score. So, even if you have a credit card that you barely use, but you've built good credit behind, you should avoid closing the account as the account closure will reduce your mix of credit as well as lower your available credit, causing a drop in your credit score. So, avoid closing accounts in good standing when applying for a mortgage to ensure your credit score does not drop.
  4. Don't add to your debt - When applying for a mortgage, you should avoid raising the balances on your credit cards and other accounts. This is so because your credit utilization (how much of your available credit you're using) accounts for 30% of your credit score. Substantially raising your credit utilization can lower your credit score, so avoid racking up more debt to keep your credit score as high as possible. If you want to improve your credit utilization, pay down some of your balance and you could raise your credit score.

Frequently Asked Questions (FAQs)

1. When submitting multiple mortgage applications, how long do hard inquiries stay on your credit report?

Hard inquiries stay on your credit report for 2 years from the date that the lender reviews your credit report. After the 2 year period, the hard inquiry will be automatically removed from your credit report. That said, experts have stated that even though it takes 2 years for a hard inquiry to be removed from your credit report, it no longer impacts your credit score after 12 months.

2. Does applying for multiple mortgages affect credit?

Yes, when you apply for a mortgage, hard inquiries are added to your credit report. Hard inquiries can lower your credit score.

3. Is it bad to apply for multiple mortgages (sending home loan applications)?

No, there is nothing wrong with applying for multiple mortgages. In fact, you should shop around for mortgages because finding the a reasonable mortgage could save you a substantial amount of money. Shopping around for a mortgage will not significantly impact your credit, as it only has a low impact.

4. How long does it take for a mortgage application to show up on your credit report?

A mortgage application shows up on your credit report as soon as a lender requests to review a copy of your credit report. The second a lender reviews your credit report, a hard inquiry will show up on your credit report, alerting you that a third party has accessed your credit report.