Keeping Your Credit Clean

Many homebuyers frequently wonder, "If I am shopping for a home loan will my credit be affected each time a credit report inquiry is made?"

It's a logical and intelligent question to ask; the answer is: not significantly, if the credit checks are done in a short period of time.

When a credit check is made by a potential lender it is called a hard inquiry. When a hard inquiry occurs it does have an impact on your credit score. However, when you're shopping for a mortgage or a car loan, credit bureaus typically cluster the hard inquiries together because the credit reporting bureaus understand that the consumer is shopping for the best loan.

"So for example, if you're shopping for a new mortgage and three potential lenders pull your credit score within three weeks, that is looked at as one inquiry for that purpose," says Steven Katz a spokesperson for TransUnion's TrueCredit.com. Keeping your credit clean is critical. Katz offers the following advice to help ensure healthy credit.

"If at all possible, people should have a locking mailbox," says Katz. Katz says mailboxes with locking devices are becoming more popular at hardware stores because identity theft is spreading. Taking precaution to protect your personal information can save you months of agony.

Shred your documents: Katz says if you don't shred your personal documents and criminals access the information, the result can be devastating to your credit.

Keep an eye on your credit card: Katz says while it is difficult, people should not let their credit card out of their sight or else they run the risk of becoming a victim of skimming. Skimming has become prevalent at some restaurants and gas stations where a clerk might have a small device that scans the consumer's credit card. "It's a very small scanner that captures all the information that is on the magnetic strip, and then the card's information can be cloned," explains Katz.

Be sure to keep all credit card receipts, and Check your credit history:
Consumers can check their credit history for free once a year at http://annualcreditreport.com. Katz says that the free reports will not contain an actual credit score, but you can get the scores for a fee.

Another good credit-checking resource is found at http://truecredit.com. The website offers access to tools to manage a consumer's credit health by receiving credit reports, credit scores, credit monitoring, and informational materials.

Edited by Dianne Dunn, from original writing by Phoebe Chongchua