Credit Report Inquiries Explained
Friday, October 5th, 2007One of the rarely understood parts of a credit report is the inquiries. This article will give you a breakdown on what an inquiry is, what it can do to your credit score, why they are there, who can place them and how long they stay on your credit report.
First of all what are inquiries? An inquiry is a record of someone checking on your credit information. There are two kinds of inquiries, “hard inquiries” and “soft inquiries. “Hard inquiries” are from a business reviewing your credit report for the purpose of an application. Examples of “hard inquiries” would be a vehicle purchase, you applying for a credit card, or a home mortgage. “Hard inquiries” will affect your credit score, by dropping it up to 5 points. “Soft inquires” are when your credit is viewed for other reasons. When you view your credit using one of the credit reporting agency websites or other personal credit report viewing websites it is put into the “soft inquiries” category. This means it will not affect your credit. Other “soft inquires” would be when credit companies view your credit for marketing purposes.
Next is “Why are credit inquiries there?” Credit inquiries are used by potential creditors or lenders to see how often and how much credit you have applied for recently. Potential creditors may think you are trying to spend beyond your means if you have too many inquiries. Inquiries are also helpful to consumer because they can warn you of identity theft. If you watch your inquiries you will know if someone else is trying to open account or purchase things under your identity.
An important thing to know is “Who can place a credit inquiry?” The Fair Credit Reporting Act states that only people with legitimate business needs can access your credit information. This includes creditors, insurers, lenders and landlords who need to review your credit as part of an application process. The inquiry will only record on the credit report that was reviewed. For example so insurance companies and lenders only use one of the three credit agency to look at your credit. The inquiry then will only appear on the one they use, say Transunion, not on all three.
The last section is on “How long to they last?” All inquiries are required to stay on for at least a year, but most “hard inquiries” will stay on for two years. If you notice inquiries that you are unsure of, you should contact the business listed on your credit report to see what it was for. Sometimes businesses will not be listed by the name you know on the credit reports. If you find that the inquiry was not authorized, you can dispute it with the credit reporting companies to have it removed.
Credit inquiries a good thing to know about and keep an eye on. Protect yourself and when you have your credit pulled by one of our loan officers here at Mortgageyes.com go over your inquiries as well as the rest of your credit report to make sure everything looks right.
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