Look For Any Inaccurate Hard Inquiries
Once youve received your credit report, there will be a section for Hard Inquiries. Youll want to scan over the entire report to make sure its accurate, but pay close attention to the inquiry section. If there are any hard inquiries listed here, make sure that you recognize them.
Its important to note that sometimes the company listed that made the inquiry doesnt match exactly with who you did business with. This often happens if a retailer partners with a bank to manage its credit card program.
For example, while you may have thought you were applying for a card with Victorias Secret or Sportsmans Warehouse, you may have a credit inquiry from Comenity Bank, which manages the credit cards for these two retailers. Thus, you may have to do a bit of Google sleuthing to make sure an inquiry is legitimate.
Hard Vs Soft Inquiries
First, lets define which inquiries count. There are two kinds, known as soft and hard inquiries.
Soft inquiries, as their name suggests, do not disturb your credit score. This includes a person checking their own credit report. Along those same lines are inquiries pulled by insurance companies or employers.
Employers use credit reports when deciding whether to hire or promote a person. So, with no credit being granted or extended, the inquiry is soft and there is no scoring damage. Landlords can go either way hard or soft. Many landlords use a service that generates a soft pull to get them the information they need to decide if a person is likely to pay their rent and be a responsible tenant.
Also included in the soft category are those pulls for preapproved offers of credit. None of these count against your score. The key differentiator is whether the inquiry is for the purpose of deciding whether to extend or increase credit.
Hard inquiries can be generally defined as those that are made in order to extend new or additional credit. FICO says that on average a consumer will see a 5-10 point drop in their scores for each hard inquiry .
Fat files those with decades of information in them will drop less and for a shorter period of time than for someone with a short history . Its important to know that a hard inquiry counts, whether any credit is ultimately extended or not. Its the intent that matters.
Should You Remove Hard Inquiries
The idea of removing hard inquiries from your credit report to improve your credit score may sound appealing. But disputing a genuine hard inquiry on your credit report will likely not result in any change to your scores.
You can, however, dispute ones that are a result of fraud. This can happen when an identity thief uses your Social Security number and other personally identifiable information to open a new account in your name.
For most people, that one extra hard inquiry may drop your credit score by just a few points temporarily, but new lenders likely aren’t going to decline your application for credit just because you have hard inquiries on your credit report. While hard inquiries take two years to fall off your credit report, typically their impact to credit scores lasts just a few months.
However, if you already have several hard inquiries on your credit report from the past couple of years or you have other, more serious, issues that are hurting your credit, one new inquiry could make it more difficult to get approved for a loan or credit card with favorable terms.
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How To Dispute A Credit Inquiry
Its important to check your credit report once or twice a year to make sure no errors or false inquiries have been listed. Heres how to get started:
Review your credit report.
Start by getting a free copy of both of your credit reports from the credit bureaus and go through all the credit inquiries listed. Count the total number of inquiries and reference them against the inquiries you know youve made like any recent loan or credit card applications. Flag any unfamiliar inquiries that you dont recall approving. Remember that youll want to go through both your Equifax and TransUnion credit reports to check for errors.
Follow up on suspicious inquiries.
If youve identified an inquiry you dont remember approving, contact the lender associated with the inquiry. Find out what the inquiry was made for to figure out whether you approved it or not.
Wait for an outcome.
The credit bureau you filed a request with will then review the details before providing you with an outcome. If youre unsuccessful, the listing will remain. If your request was successful, itll be removed.
You can unknowingly give approval for an inquiry simply by checking a box on a form. For example, if you consent to receiving credit limit increase offers on your credit card and then accept an offer, it could lead to a new inquiry on your credit report. This is why its important to always read the fine print.
How Do Credit Inquiries Affect Your Credit
Hard credit inquiries have a negative impact on your credit score.
When a hard inquiry appears on your report, it will reduce your credit score by a few points, usually no more than five to 10 points.
Other factors on your credit report can influence how much each inquiry reduces your score. If you have strong credit, an inquiry will likely have a smaller impact than if you already have poor credit.
Each hard inquiry affects your credit score. If one inquiry drops your score by 5 points, then having two might reduce it by 10, and having four on your report could drop it by about 20.
As time passes, the impact that each hard inquiry has on your credit score decreases. After a few months, youll likely regain most of the lost points, assuming the rest of your credit history remains positive.
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Gather Documents To Back Up Your Claim
If you are going to dispute a hard inquiry, you will need to provide supporting documentation so that a creditor or credit bureau can adequately investigate your claim. The required documentation will depend on the nature of the error you want to dispute. If you think a creditor got your name or identity mixed up with someone elseâs, youâll need to provide official proof of your personal information. This proof could be a driver’s licence, birth certificate or even a utility bill to show proof of address. If you believe youâve been a victim of identity theft, youâll need supporting evidence like bank or police statements or letters from creditors supporting your claim.
Check Your Credit Report Carefully And Spot The Inaccuracy You Want To Dispute
The law requires credit reporting agencies to inform you when a company checks your credit. You can find these credit checks listed in your credit report under the Inquiries section.
When you look at the entries, you will see the name of the company that performed the hard pull and the date when your credit report was accessed. Review the entries carefully to see whether you recognize all of them and that they are accurate.
To get a free credit report, visit annualcreditreport.com or call 1-877-322-8228.
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How To Remove Hard Inquiries
Wondering how to remove hard inquiries from your credit report? Unlike most things in the world of credit, there actually is a simple formula to follow once you have identified a removable hard pull:
- Take note of the characteristics of the pull, including its date and source
- Write this information, along with an explanation of how it is mistaken, in a letter
- Submit the letter to the department of your financial institution dedicated to disputing hard credit inquiries
- Monitor your pending verdict if your argument is accepted, your institution will remove the hard inquiries you contested.
If you are unsuccessful in your attempt, it is typically for good reason. However, if the challenge youre submitting is really a mistake, then you are not out of options. Under the FCRA, you can submit an additional statement to supplement your original one. This acts as somewhat of an appeal. Your challenge will be reconsidered taking into account any new information you provide. However, because you are given a small limit on the number of words this appeal can contain, use them wisely. Concentrate on hard evidence that the mistake is not your fault.
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How Do Hard Inquiries Affect Your Credit Score
Often, questions about hard inquiries arise when someone checks their credit report after applying for an auto loan or credit card, and they notice that theres been an immediate drop in their credit score.
What many dont realize is that the drop in the credit score isnt necessarily from the hard inquiry but rather from a decrease in the average age of accounts.
Hard inquiries are just one aspect of your overall credit score. Its estimated that this category makes up about 10% of your credit file. The rest of the score comes from the following factors:
How much free credit you have available compared to how much you owe. The lower the number, the better.
Account age New credit accounts are seen as less favorable than aged accounts.
Length of credit history The longer youve been a reputable borrower, the higher the score you can achieve.
Payment history Making on-time payments can boost your score, while being late can cause a drop.
Not all credit is created equal. Credit bureaus are looking for a mix of accounts, including credit cards, mortgages, student loans, retail accounts, and car loans.
If, however, you notice that the inquiries show up as individual items on your credit report, you have grounds for a dispute.
To minimize the impact hard inquiries have on your credit score, follow these tips:
Now that you’re aware of the effect of these inquiries, you’ll be able to take steps to prevent unauthorized credit inquiries in the future.
Check Your Credit Reports For Free
The first step is to get your credit reports from each of the three credit bureausEquifax, Experian and TransUnion. Often, the same information is recorded on all three, but not always, and thats why its important to check all three.
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Hard Inquiries Should Be Removed After 2 Years
The only way that a dispute will work is if the inquiry appears in error on your credit report. Fortunately, hard inquiries only appear for two years on your credit report. Most other negative information will remain for seven years. A Chapter 7 bankruptcy remains for up to 10 years, though its effects on your credit score are much more short-lived.
Get A Handle On Bill Payments
More than 90% of top lenders use FICO credit scores, and theyre determined by five distinct factors:
- Payment history
- Age of credit accounts
- New credit inquiries
As you can see, payment history has the biggest impact on your credit score. That is why, for example, its better to have paid-off debts remain on your record. If you paid your debts responsibly and on time, it works in your favor.
So, a simple way to improve your credit score is to avoid late payments at all costs. Some tips for doing that include:
- Creating a filing system, either paper or digital, for keeping track of monthly bills
- Setting due-date alerts, so you know when a bill is coming up
- Automating bill payments from your bank account
Another option is charging all of your monthly bill payments to a credit card. This strategy assumes that youll pay the balance in full each month to avoid interest charges. Going this route could simplify bill payments and improve your credit score if it results in a history of on-time payments.
Use Your Credit Card to Improve Your Credit Score
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How To Remove A Credit Inquiry From Your Credit Reports
If you’re trying to improve your credit score, check your credit report. If there are incorrect hard inquiries on your credit report, you may be able to get them removed.
If youre wondering how to remove a credit inquiry from your credit report, there are a few points to think about before you start the process.
First, it helps to know there are two types of : hard and soft. Both types of inquiries will appear on your credit report, but hard and soft inquiries are different: Only hard inquiries can affect your credit score soft inquiries dont.
So, when you want to remove an inquiry from your credit report, its the hard inquiries youll be focused on.
Youll be looking for issues like reporting errors or unauthorized hard inquiries which can indicate an identity thief has used your Social Security number or other personal I.D. to determine if you can remove inquiries from your report and whether its worth doing so.
You can seek to remove inaccurate hard inquiries from your credit report by filing a dispute or a credit inquiry removal letter with the three major credit bureaus.
But you cant remove hard inquiries from your credit report if theyre accurate. In these cases, youll have to wait for any accurate information about hard inquiries to fall off your credit report, which usually occurs automatically after two years.
A Credit Inquiry Is A Record Of When A Lender Or Creditor Requests Your Credit File
While a single hard inquiry, also known as a hard pull, is unlikely to impact your eligibility for new credit products such as a new credit card, it can affect your credit scores for up to two years.
When reviewing hard inquiries on your credit reports, you want to make sure that they are legitimate. What does that mean? For each hard inquiry line item you see, did you authorize the creditor or lender to pull your credit? If you did, you dont need to take any action.
But its possible that when youre monitoring your credit reports that youll flag instances of unauthorized hard inquiries. If you find one of these, youll want to file a dispute with the credit bureau that generated the report and ask the bureau to remove the unauthorized inquiry.
Heres how to dispute inaccurate hard inquiries from your credit reports.
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Why Lenders Use Hard Inquiries
Since inquiries can reveal whether you’ve been shopping for credit recently, potential creditors can attempt to predict whether you’ve recently taken on other debt that will make it harder for you to pay off the credit card or loan you’re applying for.
According to FICO, consumers with six or more inquiries on their credit report can be up to eight times more likely to declare bankruptcy than people with no inquiries. That is why the company considers hard inquiries made within the past year in its credit scoring calculationand why lenders consider them in making decisions about extending credit.
What Causes Illegitimate Hard Inquiries To Appear On Your Credit Report
Illegitimate hard inquiries usually appear on your credit report for one of three reasons:
- An identity thief opened new credit lines under your name
- A company ran a hard inquiry on you without your consent
- Someone made a clerical error
Whatever the cause, if the hard inquiry is an error, then getting it removed will be free and relatively simple. Follow the steps below to remove these inquiries from your credit report.
If youve been the victim of identity theft, take steps to protect yourself
If you think the erroneous hard inquiry is the result of identity theft, immediately freeze your credit and file a report at IdentityTheft.gov. You should also change all of your passwords and directly contact your lenders, credit card issuers and your bank as well.
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