Damaging Hard Credit Checks

[PremiumRSX]

I recently signed up with a Telco company on post-paid service with a Tab and they said that to do so, they required a credit check.

I thought that it would be completely harmless but when I pulled my credit report/score recently, my score had dropped almost 50 points from before. The only difference was that there was the additional Telco inquiry posted on my report.

I assume they did a hard check instead of a soft check. Is hard checks this damaging to the credit score? It was enough to drop me out of the "excellent" bracket.

How can I get my credit score back up?

[revelations]

Wait 6 months. All part of the normal process IMO.

[TimLacroix]

Originally posted by PremiumRSX
I recently signed up with a Telco company on post-paid service with a Tab and they said that to do so, they required a credit check.

I thought that it would be completely harmless but when I pulled my credit report/score recently, my score had dropped almost 50 points from before. The only difference was that there was the additional Telco inquiry posted on my report.

I assume they did a hard check instead of a soft check. Is hard checks this damaging to the credit score? It was enough to drop me out of the "excellent" bracket.

How can I get my credit score back up?

There is no scoring magic. A credit score does not stay static from month to month, even if you are doing nothing. The score may already been lower and the credit check with the Telco just lowered it a little more.

As mentioned, time will allow the score to increase.

There are a number of factors why your score increases or decreases. Did you close an account, pay off a loan? Is your balance on a credit card close to the limit or higher than usual?

Do you only have on credit card? It is recommend to have 2-3 trades.

[Disoblige]

It's because of Tim's advice that I have a small student loan running that doesn't affect me much in terms of interest at all. Otherwise I was going to pay it off and only have one credit card and technically no other debt (other than mortgage, but that doesn't show on your credit report). Maybe when I buy a new car and if I decide to use financing that I will close off that loan haha.

[PremiumRSX]

Originally posted by TimLacroix


There is no scoring magic. A credit score does not stay static from month to month, even if you are doing nothing. The score may already been lower and the credit check with the Telco just lowered it a little more.

As mentioned, time will allow the score to increase.

There are a number of factors why your score increases or decreases. Did you close an account, pay off a loan? Is your balance on a credit card close to the limit or higher than usual?

Do you only have on credit card? It is recommend to have 2-3 trades.

I've never taken out a loan before and haven't closed any of my accounts.
Only other thing different other than the Telco credit check is that I also recently changed my credit card from TD Drivers to the TD Visa Infinite.

I was told it was only a card change, but would have "closing off" my first credit card affected the score?

When I changed my card, I also increased my credit limit as well. Would this affect my credit score?

I currently only have the TD Visa Infinite card, haven't looked into other card options.

[TimLacroix]

Originally posted by PremiumRSX


I've never taken out a loan before and haven't closed any of my accounts.
Only other thing different other than the Telco credit check is that I also recently changed my credit card from TD Drivers to the TD Visa Infinite.

I was told it was only a card change, but would have "closing off" my first credit card affected the score?

When I changed my card, I also increased my credit limit as well. Would this affect my credit score?

I currently only have the TD Visa Infinite card, haven't looked into other card options.

Yes. Switching cards does impact your credit. What happens is that when you close the old card, you lose the active history of that card… and the new card is brand new with no history.

Example: Old card was 2-3 years old… new card 1 month old. The 2-3 years history stops counting towards your score and new card takes over.

The increased limit should have no affect on your score dropping. The closing and opening of a new card does.

It is hard to get around what you did. Typically we suggest clients to open a new card… and keep the old card till there is history of the new card.

[PremiumRSX]

Originally posted by TimLacroix


Yes. Switching cards does impact your credit. What happens is that when you close the old card, you lose the active history of that card… and the new card is brand new with no history.

Example: Old card was 2-3 years old… new card 1 month old. The 2-3 years history stops counting towards your score and new card takes over.

The increased limit should have no affect on your score dropping. The closing and opening of a new card does.

It is hard to get around what you did. Typically we suggest clients to open a new card… and keep the old card till there is history of the new card.

Dang... lesson learned...

When I went to into a TD branch to sign up for the Visa Infinite, I was not told of that option. Only that the Visa Infinite would replace my TD Drivers.

How long do you think it will take before my credit goes back to what it was before?

I'm also looking at getting at least a 2nd card too as per your previous suggestion.

[TimLacroix]

Originally posted by PremiumRSX


Dang... lesson learned...

When I went to into a TD branch to sign up for the Visa Infinite, I was not told of that option. Only that the Visa Infinite would replace my TD Drivers.

How long do you think it will take before my credit goes back to what it was before?

I'm also looking at getting at least a 2nd card too as per your previous suggestion.

Unfortunately, many bank reps do not understand credit…

Recovery of your score will just take time… depending on how long you had your TD Drivers card.

As for getting another credit card… I would wait 3-6 months before seeking another credit card. Obtaining one too early could be considered credit seeking and have another score drop.

From a mortgage perspective… lender like to see 2 active trades for at least 2 years with minimum of $1500 limits on the trade (credit card, line of credit, etc).

[googe]

"Average age of accounts" is a big factor in score. Those shitty old cards you have are gold, don't close them. Last I checked, you couldn't break 800 without an 8 year old card or so, but they change the scoring so I'm not sure on that.

I disagree with above poster, get as many cards as you can as early as you can, then let your average account age grow. You'll take a minor hit initially but wait it out and you'll be doing better. Don't get cards with fees though or you have to pay those forever to keep your old accounts.

[CapnCrunch]

Credit scores are ridiculous. They go up when they should go down, and down when they go up.

[PremiumRSX]

Originally posted by googe
"Average age of accounts" is a big factor in score. Those shitty old cards you have are gold, don't close them. Last I checked, you couldn't break 800 without an 8 year old card or so, but they change the scoring so I'm not sure on that.

I disagree with above poster, get as many cards as you can as early as you can, then let your average account age grow. You'll take a minor hit initially but wait it out and you'll be doing better. Don't get cards with fees though or you have to pay those forever to keep your old accounts.

Before my credit dropped, I was pretty close to 800. I guess I partly screwed my chances of hitting 800 or going past it. I had my previous card for probably around 7 years. :(

I don't expect to be buying a house anytime in the near future so at least I have time to build my credit back up again.

[FraserB]

Right now your credit score is irrelevant when it comes to a mortgage since it's so high. Probably see no difference between having a 750 and 800 when you apply.

[TimLacroix]

Originally posted by FraserB
Right now your credit score is irrelevant when it comes to a mortgage since it's so high. Probably see no difference between having a 750 and 800 when you apply.

From a mortgage stand point, minimum credit score for obtaining a mortgage is 620. This also depends on what is going on to have the score in the low 600's.

However, the ideal minimum range is 650-680.

Greater than 680 - 700 is the sweet spot for mortgages. Certain products require 680-700 depending on your situation.

Note that a 650, 700 or 800 score will yield the same interest rate.

[TimLacroix]

Originally posted by googe
"Average age of accounts" is a big factor in score. Those shitty old cards you have are gold, don't close them. Last I checked, you couldn't break 800 without an 8 year old card or so, but they change the scoring so I'm not sure on that.

I disagree with above poster, get as many cards as you can as early as you can, then let your average account age grow. You'll take a minor hit initially but wait it out and you'll be doing better. Don't get cards with fees though or you have to pay those forever to keep your old accounts.

Having a score over 800 is not going to give you any advantage over someone with a 700 score. Credit scores are just one factor in qualifying for a loan, credit card, mortgage etc.

You do not need a lot of accounts to have a very good score in the 700-800 range - which is an ideal score to have and maintain.

Having 2 to 3 trades active on your credit is a good number… and then with time and great management of these accounts, you will have an excellent score.

[Afrodeziak]

Since we're on the topic. What's the best way to get a credit check if I've never done so?

Looks like there is a wealth of knowledge here.

[max_boost]

Ah Thanks Tim!

For that reason I don't even care what my score is. It's fluctuated between 720 and 780 for the past decade haha Like you said, one aspect of getting approved is the min. score. For TD, it was 650. I guess it would be cool to have a high score though.

[TimLacroix]

Originally posted by max_boost
Ah Thanks Tim!

For that reason I don't even care what my score is. It's fluctuated between 720 and 780 for the past decade haha Like you said, one aspect of getting approved is the min. score. For TD, it was 650. I guess it would be cool to have a high score though.

Max_boost - at 650 beacon score you should not have an issue getting a mortgage. But again, it depends more on the whole picture.

There is more flexibility and different servicing ratios when your beacon is over 680. So that would be the goal for most…

[TimLacroix]

Originally posted by Afrodeziak
Since we're on the topic. What's the best way to get a credit check if I've never done so?

Looks like there is a wealth of knowledge here.

You can obtain your credit from the following 2 places. I recommend doing both if you have never done so before as there may be a discrepancy between the 2. Not all institutions report accounts to both Equifax and TransUnion.

You can pull your report for free or you can get instant access for a small fee… below are the websites.

Equifax Canada (http://www.consumer.equifax.ca)
Tel.: 1-800-465-7166

TransUnion Canada (http://www.transunion.ca)
Toll-free: 1-866-525-0262

[Afrodeziak]

Thanks Tim,

Can you elaborate if checking my own credit in this way will alter my score at all? Or is that only when a creditor checks?

Edit: Also, I'm not seeing any free options with Equifax or TransUnion.


Originally posted by TimLacroix


You can obtain your credit from the following 2 places. I recommend doing both if you have never done so before as there may be a discrepancy between the 2. Not all institutions report accounts to both Equifax and TransUnion.

You can pull your report for free or you can get instant access for a small fee… below are the websites.

Equifax Canada (http://www.consumer.equifax.ca)
Tel.: 1-800-465-7166

TransUnion Canada (http://www.transunion.ca)
Toll-free: 1-866-525-0262

[403ep3]

Unless I am looking for a mortgage I could care less what my score is. It's nice to have it higher though :thumbsup:

^^^ The free report gets sent through the mail and doesn't show you a score. It just shows some information on credit checks done in the past

[Afrodeziak]

So as a current renter but a probable first time home buyer, paying my bills, having my credit cards etc, is it feasible at this point for me to pay for a proper credit check and then seek some credit advice prior to securing a mortgage rate?

[CapnCrunch]

Originally posted by Afrodeziak
Thanks Tim,

Can you elaborate if checking my own credit in this way will alter my score at all? Or is that only when a creditor checks?

Edit: Also, I'm not seeing any free options with Equifax or TransUnion.



There is a free way to check it. You basically have to write a mail them a letter with a copy of your drivers license, requesting it.

I believe this only gets you your credit history, and not your credit score. I could be wrong on the last point.

Search their websites a bit, you usually have to look around for the procedure to get a free report, as they're way more interested in selling you their garbage products than mailing you a free credit report.

[403ep3]

Originally posted by Afrodeziak
So as a current renter but a probable first time home buyer, paying my bills, having my credit cards etc, is it feasible at this point for me to pay for a proper credit check and then seek some credit advice prior to securing a mortgage rate?

It's not all about your credit score to be honest. I checked my score before I bought a house and it just made me confident that I would get accepted. They check your employment history/status and how much you make too. Talk with one of the brokers here on beyond or hit up your bank.




https://help-en.equifax.ca/app/answers/detail/a_id/300/~/free-credit-file-options-for-canadian-residents

[TimLacroix]

Originally posted by Afrodeziak
So as a current renter but a probable first time home buyer, paying my bills, having my credit cards etc, is it feasible at this point for me to pay for a proper credit check and then seek some credit advice prior to securing a mortgage rate?

As a few other Beyond members have mentioned, the credit score is one aspect of obtaining a mortgage.

The process is to meet with a lender/ broker and discuss your current situation and run a few numbers to see if you qualify and what that qualification would be? This does not mean that a credit bureau needs to be pulled.

Caution: Most banks will want to do this right away before discussing rates.

As a broker, I like to understand your current situation, review your income, debts and what you would like to do (i.e. purchase…). While always being conscious of budget so that you are not house poor!

Then we would look at a credit bureau to pre-approve (one step further than a pre qualifying) and will allow us to protect rates etc.

PM me if you would like to discuss further.