Impact Of Identity Theft On Your Credit Report
Identity theft occurs when someone steals your personal information and uses it to apply for new lines of credit. If these new accounts go into default, they will appear on your credit report and hurt your score.
Cleaning up your credit after identity theft can take anywhere from a day to several months or even years. The longer it takes you to realize someone stole your identity, the more difficult it will be to undo the damage. Monitoring your credit report will help you to stay on top of potential fraudulent charges.
Applying For Credit Hard Inquiries
When applying for new credit you will generally give your name, address, phone number and social security number. These are needed to accurately identify the correct credit record to pull.
Your credit application will require your signature, giving the lender or a financial consultant permission to access your credit file. You may be familiar with this approach if you have ever bought a car.
If you walk into the dealership, they will ask you to fill out a credit application before they allow you to test drive. You may be subject to multiple hard inquiries using this approach, as the dealership will shop around for the best deal for you. Events like this results in a hard pull.
After I bought my car from a national dealership, I viewed my credit report and saw eight entries. I immediately panicked because I was not aware that the dealers finance personnel petitioned that number of lenders.
After some research, I found that the FICO scoring models treated multiple inquiries for one type of loan as one inquiry, indicating that you were shopping around for the best rates. This method prevents your score from taking a complete nosedive.
How long do hard inquiries stay on your report? Hard inquiries impact your score for about a year, but generally fall off your report within 2 years.
What Is A Credit Inquiry
A credit inquiry;takes place when a bank, lender, or other credit-issuing institution views your credit report before offering you a loan or credit card.
There are other instances where a credit inquiry may also be used, which can include:
- A landlord or property management company checking your credit before approving you for an apartment lease
- A cell phone company inquiring about your credit before approving you for a contract
- A potential employer who wants to make sure your credit is in favorable standing before offering you a job
Hot Tip: While some situations will require that you actually apply for a product or service before they can check your credit, there are other instances where you dont have to give your approval for a credit check.
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What Is A Credit Enquiry
There are two main types of credit enquiries: “soft” enquiries and “hard” enquiries.
A soft enquiry is recorded any time you request a copy of your credit file and doesn’t really have an impact on your credit score.
A “hard” enquiry refers to any request for your credit file that’s made by a third party, such as a lender. For instance, every time you apply for a line of credit, such as a card or personal loan, the lender you’ve applied with will submit a request for your credit file. This request is recorded on your credit history as a “hard credit enquiry”. While a few of these enquiries is usually fine, too many hard enquiries on your credit file can suggest to lenders that you are not able to manage credit accounts responsibly. This may lead to a declined application.
How do I know if I have “too many credit enquiries”?
If you’re concerned about the number of enquiries on your credit history, the first step is to get a copy of your credit file. You can check your credit report and credit score for free with finder and we’ll notify you when something on your report changes, such as a credit enquiry.
When you get your free credit report and look at your credit enquiries, it’s important to note that it’s not so much about the total number of enquiries as it is about the time between them. Less time between credit enquiries increases the chances that they will have a negative impact on your credit score.
Preventing Unauthorized Hard Inquiries
To prevent future unauthorized hard inquiries, consider placing a freeze on your credit report. This option prevents any lenders or creditors from accessing your credit information.
Its great for preventing identity theft because no one can open a new credit account using your financial information since they wont get approved without a credit check. However, it also helps prevent unwanted inquiries if you find this to be an ongoing headache.
Placing a freeze on your credit report and having it removed both incur separate fees in most states, so dont do this if youre planning on applying for a new credit card or loan in the near future. But if you anticipate your financials to remain the same for the time being, this can be a convenient option to keep your credit nice and clean.
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How Do Credit Inquiries Affect My Credit Score
Credit inquiries actually dont individually affect your credit score that much. According to FICO,;a single inquiry only affects your score by less than five points. As such, if youre stressing about a single credit application or inquiry into your credit score, dont. It shouldnt have any lasting effects on your score.
However, if youve made multiple applications, or inquired many times about your score, that number will go up. Especially in the case where your credit history is quite bare, you might see a larger impact. If your credit history is short and you dont have much credit to speak of, it could have a larger impact. If there are inquiries you did not authorize, you can dispute the inquiry with the credit bureaus.
How To Remove Inquiries From My Credit Report
Youve probably been asking yourself how to remove inquiries off of your credit report, because youre curious to know how to raise your credit score. For most individuals credit inquiries are a minor irritant, however for some people it is a complete nightmare. Fortunately for you, there are simple steps you can take that will help get rid of those inquiries once and for all. Lets take a look at how to remove inquiries off of your credit report and then look at how you can raise your credit score.
The first step to removing these soft pulls off of your credit score is to stop receiving them altogether. If you are receiving tons of soft pulls every month, the first thing you want to do is stop receiving them. There are two main reasons why an individual would start receiving soft pulls on their credit profile, either they pulled your credit for one reason or they actually have an active account with the credit card company that they are investigating. In most cases it is best to just sit it out a couple months, however if you are not willing to just sit it out you can follow this next step to quickly remove these soft pulls from your credit profile.
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How Do I Know If I Have Too Many Credit Inquiries
Well, no one can put a concrete number on how many credit inquiries is too many. If youre concerned about the number of inquiries on your credit history, the first step is to get a free copy of your credit report. Its not so much about the number of inquiries, but more so the time between them.
For example, if youve applied for five credit cards in a period of three months and have five hard inquiries as a result, its likely to be considered as a negative detail on your report. In contrast, having five hard credit inquiries listed over a period of five years will have far less of an impact, or sometimes none at all.
I think I have too many inquiries on my credit report, what should I do?
So if you looked at your credit report and you think the number of credit inquiries listed could have a negative impact on your credit, you can start to improve your credit score in other ways:
What Triggers A Hard Inquiry On Your Credit Report
If you see a hard inquiry listed on your credit report it is because you have applied for credit in the last two years.
This could mean that you applied for a credit card, whether it be a rewards card, a cash-back card or even a;balance transfer card;like the;U.S. Bank Visa® Platinum Card.
A hard inquiry will also end up on your personal credit report when you;open a business credit card. This is because your personal credit is usually reviewed by the issuer even when applying for a small business credit card, such as the;Capital One Spark Classic for Business.
When you apply for a mortgage, student or auto loan, a hard inquiry will be noted on your credit report. There’s a difference, however, between applying for multiple credit cards in a short amount of time and shopping around for the best mortgage rate in a short amount of time.;
“There are certain instances, such as applying for a car loan or a mortgage, that only count as one inquiry for scoring purposes as long as they occur within a certain window of time, typically 14 to 45 days,” Shon Anderson, a certified financial planner and president at Anderson Financial Strategies, tells;CNBC Select. “The reason is they know you are probably shopping around for the best terms, and you are probably not going to get three or four car loans or mortgages all at once.”
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How A Hard Inquiry Impacts Your Credit Score
Although hard inquiries remain on your credit report for two years, FICO only considers inquiries from the last 12 months when calculating your credit score.
For example, if you see a hard inquiry listed on your credit report but it was from over a year ago, it wouldn’t influence your credit score or deduct any points from it.
Your credit history also plays a role in how much a hard inquiry would impact your credit score.
According to FICO, one credit inquiry on most people’s credit reports will take less than five points off of their FICO score. They say “most” people because not everyone has the same credit history. If you have a healthy credit history and credit score to begin with, it’s likely that any hard inquiry on your credit report would do very little damage to your score, or even none at all.
Hard inquiries tend to have a greater impact on the credit scores of people with a short credit history or few credit accounts. This means that for those just starting to build their credit, a hard inquiry can knock off more points from your credit score than it would for someone who has a long credit history. But don’t let that prevent you from applying for credit. It’s OK to have inquiries periodically; it indicates you are trying to build credit; but you just don’t want too many hard inquiries on your credit report in a short amount of time.
Review Your Credit Reports
You should make it a habit to regularly review your credit reports from the three major consumer credit bureaus Equifax, Experian and TransUnion. The may not know which information is incorrect unless you flag it.
To check for incorrect hard inquiries on your credit reports, look for a section labeled something like
- Requests viewed by others
- Regular inquiries
There may also be a separate section for soft inquiries, which should be labeled something like requests viewed only by you. Unlike hard inquiries, soft inquiries wont affect your credit scores.
Not sure how to read the information your credit reports? Learn more about whats on your credit reports and how to read them.
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How Much Does A Hard Inquiry Lower Your Credit Score
Hard inquiries can lower your credit score 5 points or less.
Your FICO score considers your payment history, credit utilization, debt amounts, length of credit history, credit variety, and amount of new credit. Your payment history and amount of total debt impacts your credit score much more.;;;
In general, the number of hard inquiries on your credit report isnt a major factor in your credit score, Experian notes, adding hard inquiries are part of the new credit category, but they dont weigh heavily relative to the other factors.
Are You Affected By Credit Inquiries As A Co
It could be that you are a co-signer on another persons loan or credit application. In this case, your own credit report and score can be affected. This is because, as a co-signer, you are accepting full responsibility for the debt if the borrower does not pay back the borrowed funds as agreed.
In the case of co-signing for someone else, the information about the loan or account will actually show up on both your and the other persons credit report. So its important to make sure the person you are co-signing for is financially responsible, and that they will make all their required payments on time.
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Hire A Credit Repair Service
A reputable company like may be a viable solution if your report is riddled with inaccuracies that further complicate the repair process. can help you with the following items:
- Cleaning up credit report errors
- Disputing inaccurate negative entries
- Handling creditor negotiations
If you decide to hire a credit repair service, know that laws govern how they operate and what they can do. The establishes the following regulations governing credit repair services:
- They cannot provide false or misleading information concerning a persons credit status and identification
- They must provide a detailed description of the service
- They cannot receive payment for the performance of any service until said service has been entirely performed
- There must be a written contract detailing the services to be performed, the time frame during which these services will be performed, and the total cost for those services
- They cannot promise to remove accurate information from a credit report before the term set by law
- The consumer will have three days in which to review the contract and cancel without penalty
Can I Remove An Enquiry From My Credit Report
You can’t remove a legitimate enquiry from your credit report. In most cases, you will have to wait until the five years has passed. After this, they are removed from your history.
In general, the only details that can be removed from your credit report are those that are incorrect or erroneous. This includes if a lender made an enquiry without proper authorisation from you. Another example is if your name was attached to an account you never opened or if an account was incorrectly listed as “in default”. In these cases, you can submit a request to have the incorrect details removed from your file.
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Disputing Inaccurate Hard Inquiries Yourself
It’s important to check your credit reports regularly for accuracy. If, while doing this, you’ve noticed a hard inquiry on your credit report that you believe is the result of identity theft, you can file a dispute with each of the three national credit reporting agencies and petition to have them update the inaccurate information.
The first step is to review your Experian credit report through our Dispute Center and verify your information. Next, confirm that the inquiry was not a result of identity theft.
There may be situations where you don’t recognize the name of a company that checked your credit or you don’t remember applying for a loan with a company you do recognize. Here are a few scenarios when inquiries you don’t recognize may be legitimate:
If you don’t recognize the company name that performed the hard inquiry, contact the company for more information. When you check your credit report through the Experian Dispute Center, the hard inquiry will be accompanied by the company name and typically the mailing address and a phone number.
If you have verified that the hard inquiry is due to identity theft, then the dispute would be handled over the phone with Experian specialists. You can register with or log in to our Dispute Center to find our support options. There is no charge to use this service.
Fraudulent Account Inquiries & Credit Applications
Lastly, if youre making payments on time, lowering your credit utilization, and youve cleared up any mistakes and your score is still looking pretty sad, there could be a possibility of fraud on your account. If your personal information has been stolen, scammers may be opening new accounts in your name without your knowledge. These accounts are neglected, often over-utilized and never paid off, which has a terrible impact on your credit score. Plus, each time a new account is opened, youll have a hard inquiry drop your credit score a few more points. However, you will be able to see all open accounts on your detailed credit history report. If youre checking for mistakes every year, which you should be, you most likely already saw some lines of credit that you dont recognize. It is also possible to dispute having too many hard inquiries on your credit report.
Having multiple hard inquiries in a short time could drop your credit score. While credit unions will recognize if you are shopping around for a car, its better to not have too many inquiries in quick succession. If you suspect fraud or dont understand why your score isnt improving, it may be time to consider credit repair services.
For more letter templates and disputing items on your credit report, visit our dispute letter resource center.
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