The Mortgage Insider - Home Financing with Contemporary Mortgage

What are Credit Inquiries & How do They Affect my Credit?

Person reviewing credit report

Deciphering Credit Inquiries: What You Need to Know

In the world of credit reports, inquiries often mystify many of us. They appear seemingly out of nowhere, leaving us uncertain about their origin and duration. No, we’re not discussing unexpected visits from in-laws; it’s the inquiries on our credit reports that puzzle us. Understanding inquiries is crucial as they stand as one of the most perplexing and least grasped elements in the credit reporting system. Let’s dive into the details of inquiries and how you can effectively manage them:

What exactly are inquiries?

Inquiries signify instances when someone checks your credit information. They’re categorized into two types: ‘hard inquiries,’ which occur when a business reviews your credit report for credit application purposes, and ‘soft inquiries,’ which happen when your credit is checked for reasons other than credit applications, like pre-approved offers or account management. Applying for a new credit card triggers a hard inquiry, potentially causing a temporary dip in your credit score. Conversely, checking your own credit or when it’s checked for non-credit-related reasons won’t affect your credit score; these are considered soft inquiries.

Does checking my own credit impact my score?

No, checking your own credit doesn’t harm your credit score. You can review your credit data without worrying about negatively affecting your score.

Why are inquiries recorded?

Hard inquiries are logged to give potential creditors and lenders insight into your credit application frequency. Too many hard inquiries might signal that you’re attempting to borrow beyond your means. However, multiple inquiries for the same purpose within a short period are often consolidated into a single, less impactful inquiry session. Moreover, inquiries serve consumers by potentially alerting them to identity theft attempts when someone tries to open accounts in their name.

How long do inquiries last?

Most hard inquiries persist on your credit report for two years from their original placement. All inquiries, at minimum, remain visible for a year. While disputing inquiries is allowed, proving their inaccuracy can be challenging. If unsure about an inquiry, contacting the listed financial institution before disputing might provide clarity.

When it comes to securing a mortgage, every aspect of your credit history matters. Understanding the nuances of credit inquiries becomes particularly crucial in this context. Mortgage lenders carefully assess your credit report, including the frequency and nature of inquiries, to evaluate your financial responsibility and risk level. While inquiries are a necessary part of managing credit, being mindful of how they impact your report, especially when applying for a mortgage, can make a substantial difference. Keeping a vigilant eye on your credit health and minimizing unnecessary hard inquiries ensures you’re in a stronger position to secure the mortgage terms that align with your financial goals.

Contact us today to learn more!


Posted by Austin Howland on January 5th, 2024 8:03 PM

Credit History - How Long Deragatory Events Stay on your Credit

Credit Report in front of laptop


Are you eagerly anticipating the removal of old records like late payments, bankruptcies, and tax liens from your credit report? Taking charge of your credit health involves staying informed about the expiration dates of various records on your report.

For instance, identifying an outdated bankruptcy entry from, say, 2001, can significantly bolster your credit score once rectified. Delve into our guide below to supercharge your credit management strategy:



Different types of bankruptcy (Chapter 7, 11, and 13) typically linger on your credit report for 7 to 10 years following the filing date. Any accounts included in the bankruptcy filing should be labeled as “Included in BK” and will remain on your report for the same duration.


Charge-off Accounts

Accounts that have been charged off due to delinquency tend to stick around on your credit report for 7 years.


Closed Accounts

Delinquencies associated with closed accounts persist on your report for 7 years from the reporting date. However, positively closed accounts, devoid of any delinquencies or late payments, may remain on your credit report for a longer period.


Collection Accounts

Accounts forwarded to collections typically stay on your credit report for 7 years from the date of the last 180-day late payment on the original account. When paying off the full balance, the record will be annotated as “paid collection.” But if settling for a reduced amount, expect the record to reflect “paid for less than the total due.”



Whenever a creditor or lender conducts a credit check, resulting in a “hard inquiry,” it stays on your report for up to two years. Accumulation of these hard inquiries can marginally impact your credit score. However, harmless “soft inquiries,” such as those from employers or your own credit checks, don’t affect your score and remain unseen by businesses.



Most judgments, including those from small claims, civil cases, and child support, typically remain on your credit report for 7 years from the filing date.


Late Payments

Delinquencies of 30 to 180 days due to late payments can linger on your credit report for 7 years.


Tax Liens

Unpaid city, county, state, and federal tax liens pose severe implications, potentially remaining indefinitely on your credit report. Once paid, these liens typically stay on your report for 7 years from the payment date.

Understanding the intricacies of your credit history isn’t merely about tidying up your financial past. It can play a pivotal role in securing significant financial milestones, like obtaining a mortgage. Lenders scrutinize credit reports to assess an applicant’s financial reliability and loan eligibility. By proactively managing and rectifying discrepancies or outdated entries on your credit report, you pave the way for a stronger credit profile. This, in turn, increases your chances of securing favorable mortgage terms and realizing your dream of homeownership. Taking charge of your credit history today sets the stage for a promising financial future tomorrow.

Contact us today to learn more!


Posted by Austin Howland on January 5th, 2024 7:47 PM

The Crucial Role of Credit Scores in the Mortgage Process

Picture of credit score and credit application

When it comes to securing a mortgage, your credit score is often the unsung hero of the process. Many potential homebuyers underestimate just how important this three-digit number can be. In this article, we'll delve into the significance of credit scores in the mortgage process and why maintaining a healthy credit profile is vital to your homeownership dreams.

The Credit Score: Your Financial Report Card

Your credit score is a numerical representation of your creditworthiness, a report card that lenders use to assess the risk of lending to you. It reflects your credit history, including your payment history, the amount of debt you owe, the length of your credit history, new credit inquiries, and the types of credit you use.

Why Is Your Credit Score Important for Mortgages?

1. Interest Rates:

One of the most significant impacts of your credit score on your mortgage is the interest rate you'll be offered. Lenders typically offer lower interest rates to borrowers with higher credit scores. This means that with an excellent credit score, you can potentially save thousands of dollars over the life of your mortgage.

2. Loan Approval:

Lenders use your credit score to assess your creditworthiness. A low credit score can make it challenging to secure a mortgage. In contrast, a higher credit score improves your chances of an easier loan approval.

3. Down Payment Requirements:

A strong credit score can reduce the required down payment for some loan programs. In contrast, borrowers with lower credit scores may be required to make a larger down payment to mitigate risk for the lender.

4. Mortgage Insurance:

A lower credit score often results in the need for mortgage insurance. Mortgage insurance can add to your monthly mortgage costs, so maintaining a good credit score can help you avoid this expense.

Improving Your Credit Score for a Better Mortgage Deal

If your credit score isn't where you want it to be, there are steps you can take to improve it:

1. Check Your Credit Report: Review your credit report for errors and discrepancies. Dispute and rectify any inaccuracies you find. For more info on how to retrieve a copy of your free credit report, click here: How to Get Your Free Credit Report

2. Pay Bills on Time: Consistently paying your bills on time is the most significant factor in your credit score. Set up reminders or automatic payments to ensure you're never late.

3. Reduce Debt: Lowering your credit card balances can significantly improve your credit score. Aim to keep your credit utilization (the amount of credit you use relative to your total credit limit) below 30%.

4. Avoid Opening New Credit Accounts: Each new credit inquiry can temporarily lower your score. Avoid opening new credit accounts before applying for a mortgage. 

5. Don't Close Old Accounts: The length of your credit history matters. Keep older, well-managed accounts open to demonstrate a longer credit history.

6. Seek Professional Guidance: If you're struggling to improve your credit score, consider working with a credit counseling agency or a financial advisor. Feel free to contact us if you would like a referral for one of these companies.


Your credit score is a critical factor in the mortgage process. It affects not only your eligibility for a loan but also the terms and conditions you'll be offered. Understanding the significance of your credit score and taking steps to maintain or improve it is a vital aspect of achieving your homeownership dreams. Start early, manage your credit responsibly, and consider seeking guidance if necessary to ensure your credit score works in your favor when it's time to secure a mortgage. Remember, the higher your score, the better your mortgage deal is likely to be.

If you have questions about your credit score, the mortgage application process, or any aspect of securing a mortgage, our team of experienced mortgage professionals is here to help. Feel free to contact us for more information and personalized guidance on your journey to homeownership. We're dedicated to assisting you in every step of the process.

For more information on credit scores, check out some of our other pages on the subject: 


Posted by Austin Howland on October 18th, 2023 8:34 PM

What are Debt-to-Income Ratios?

How do They Impact Qualifying for a Mortgage?

Debt to Income Balance

When it comes to applying for a mortgage, understanding your financial standing is crucial. Lenders assess various factors to determine your eligibility, and one significant aspect they consider is your debt-to-income ratio (DTI). In this blog post, we will explore what DTI ratios are, why they matter, and how they can affect your chances of qualifying for a mortgage.

(NOTE: In this blog post you may see the acronym PITIA referenced. This stands for: Principal, Interest, Taxes, Insurance & Association Dues. It represents your total monthly housing payment.)

What is a Debt-to-Income Ratio?

A debt-to-income ratio (aka DTI) is a financial measurement that compares your monthly debt obligations to your gross monthly income. It provides lenders with insights into your ability to manage additional debt and make timely mortgage payments. This ratio is calculated by dividing your total monthly debt payments by your gross monthly income and multiplying the result by 100.

Mortgage Brokers, like Contemporary Mortgage Services, Inc., use this DTI calculation to determine how much of a monthly PITIA payment a borrower can qualify for and comfortable afford.

Importance of Debt-to-Income Ratios for Mortgage Qualification:

Lenders consider your debt-to-income ratio as a key indicator of your financial stability. It helps them assess the level of risk associated with lending you money for a mortgage. A lower DTI ratio generally indicates a lower risk for lenders, as it suggests that you have a higher capacity to meet your financial obligations. Conversely, a higher DTI ratio indicates a higher level of debt relative to your income, which may raise concerns for lenders.

Acceptable Debt-to-Income Ratios:

The acceptable DTI ratios can vary depending on the type of mortgage and the lender's guidelines. However, in general, most lenders prefer a DTI ratio of 43% or lower. Certain loan programs, such as FHA and VA, typically allow a much higher DTI than Conventional loan programs. However, Conventional loan programs, will also accept a higher DTI, when there are compensating factors (i.e. additional assets left over, good credit history and score, high down payment, etc...)

There are two main types of DTI ratios that lenders consider:

1. Front-End DTI Ratio:

   - This ratio measures your housing-related expenses (e.g., mortgage payments, property taxes, insurance) against your gross income.

   - Ideally, your front-end DTI ratio should be 28% or lower.

Calculation: Total Monthly Housing Payment (PITIA) / Total Monthly Gross Income = Front-End Ratio

2. Back-End DTI Ratio:

   - This ratio includes all your monthly debt obligations, including housing expenses.

   - For most lenders, the maximum back-end DTI ratio they accept is around 36%.

Calculation: Total Monthly Housing Payment (PITIA) + Monthly Debt Payments / Total Monthly Gross Income = Back-End Ratio

(Click HERE to see more examples on how these ratios are calculated)

Effectively Managing Your Debt-to-Income Ratio:

If your DTI ratio is higher than desired, there are steps you can take to improve it and increase your chances of qualifying for a mortgage:

  1. Reduce Existing Debts:
    •  Focus on Paying down your outstanding debts. This will lower your DTI ratio and demonstrate your ability to manage your financial obligations responsibly.
  2.  Increase Your Income:
    • Consider options to increase your income, such as taking on a part-time job, freelancing, or pursuing additional educational opportunities that could lead to higher-paying employment.
  3.  Avoid Taking on New Debts:
    •  Minimize new credit applications and large purchases that could increase your debt load. Keep your financial commitments manageable.


Understanding your debt-to-income ratio and its impact on qualifying for a mortgage is essential when pursuing homeownership. Lenders carefully analyze this ratio to evaluate your financial stability and assess the level of risk associated with lending to you. By maintaining a healthy DTI ratio and effectively managing your debts, you can enhance your chances of securing a mortgage and realizing your dream of owning a home.

Contact Us Today to Learn More:

Navigating the mortgage qualification process can be complex, but you don't have to do it alone. As a trusted mortgage broker, we have the expertise and resources to help you understand and improve your debt-to-income ratio. Contact us today to learn more about how we can assist you in finding the right mortgage options tailored to your unique financial situation. Let us guide you towards achieving your homeownership goals.

To learn more about Debt-to-Income ratios and to see example calculations, check out our full webpage on the topic:


Posted by Austin Howland on August 7th, 2023 9:11 PM
View Comments (1)


My Favorite Blogs:

Sites That Link to This Blog:

Contemporary Mortgage Services, Inc

498 Palm Springs Dr Suite 220
Altamonte Springs, FL 32701