A borrower has multiple recent credit inquiries on their credit report from auto dealerships and mortgage lenders within the past 30 days. How do these inquiries typically impact the credit score?
Correct Answer
B) Multiple inquiries of the same type within 14-45 days are typically counted as one inquiry
Credit scoring models typically treat multiple inquiries of the same type (auto loans, mortgages) within a 14-45 day window as a single inquiry to account for rate shopping. This prevents consumers from being penalized for shopping around for the best rates. However, inquiries for different types of credit (auto and mortgage) may be counted separately.
Why This Is the Correct Answer
Credit scoring models typically treat multiple inquiries of the same type (auto loans, mortgages) within a 14-45 day window as a single inquiry to account for rate shopping. This prevents consumers from being penalized for shopping around for the best rates. However, inquiries for different types of credit (auto and mortgage) may be counted separately.
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A lender discovers that the borrower provided incorrect information about a monthly debt payment ($200 instead of $800) after the initial Loan Estimate was provided. The lender may issue a revised Loan Estimate because this represents: