If you’ve recently checked your credit report for the first time (or even the first time in a while), you may have noticed an Inquiries section towards the bottom of the report. In most cases, this section has minimal impact on your credit. But the way you manage your credit, particularly the way you apply for it, can end up making a big difference if not facilitated correctly. Learning about inquiries on your credit report can also help you spot any potential credit fraud. Read on to find out everything you need to know about what credit inquiries are, how they affect you, and how to get rid of them.
What’s the difference between hard inquiries and soft inquiries?
Each time a bank or insurance company receives an application from you, an inquiry is made on your credit report. They have been authorized by you and are called “hard inquiries.” Hard inquiries result in a reduction of your overall credit score.
When a credit card company or mortgage provider goes through hundreds of thousands of credit reports by making inquiries for their marketing departments, they are called “soft inquiries” and those inquiries don’t affect your credit score, even though they show up on the credit report. Pre-approvals and pre-qualifications initiated on your own usually also only constitute a soft inquiry. To be sure, however, check with the creditor before agreeing to one.
What if I have a hard inquiry on my credit report that I did not authorize?
Sometimes companies and individuals make hard inquiries on your credit report that were not authorized by you. They can affect your credit score negatively. In those cases, there is a way to have the inquiry removed and to improve your credit score as a result. It’s called a “credit inquiry removal letter” or a “credit inquiry dispute letter.”
Even if a hard credit inquiry on your credit report is “questionable” and you are not sure if you made it or not, you should dispute it as the burden of proof is on the credit bureaus and your creditors. They must prove that you did. If not, the credit inquiry must be removed from your credit report.
How do credit inquiries affect my credit score?
Credit inquiries affect a credit score at different times and in different ways. When you go out looking for a new car, you might sign two or three applications for credit from various banks, auto finance companies, or credit unions. They all make inquiries into your credit and by signing the application, you authorize them to do so. Credit bureaus understand this is simply a consumer out shopping for the best rate they can get. The formulas the credit bureaus utilize can track this data and, once again, as long as the activity takes place within a short period of time, your credit score isn’t affected. But if you take too long and shop around, the resulting inquiries can affect your credit score negatively.
The bureaus allow for this activity and don’t deduct credit score points for each individual inquiry when this occurs, as long as the inquiries are all made within a 45-day window, they group them together and count them as one inquiry. While having too many credit inquiries can hurt your score, they are the smallest scoring factor. In fact, each inquiry typically deducts about five points from your credit score. We find that most people spend too much time worrying about credit inquiries when they have worst negative items on their credit report that have a much bigger impact on their credit score. But if you apply for credit cards every single month, either out of necessity or as a rewards bonus hack, you can really start to cause some damage.
How long do inquiries stay on my credit report?
All credit inquiries are listed on your credit report for two years. After that, they should fall off naturally. On the plus side, an inquiry only affects your actual credit score for one year. Once that period is up, your score should rebound a few points. Again, if you just have a few inquiries listed on your credit report, it’s no big deal. But if you have a long list of them, you might want to try getting one or more of them removed. This is especially true if you don’t remember authorizing the inquiry. To dispute an inquiry, you must contact each credit bureau that lists it. Check out the next section for an example letter.
Credit Inquiry Removal Letter Sample
We have prepared this sample letter to send to a credit bureau requesting an investigation of an unauthorized inquiry appearing on your credit report. Be sure to send via certified mail rather than standard mail delivery to get a faster response and ensure your letter is received. Try to make the letter appear more personal than this form letter, but make sure to include all the information. The sample letter should look like:
Your Phone #
Credit Bureau: Name
Credit Bureau: Address
RE: Request for Investigation of Unauthorized Inquiry
Dear Sir or Madam,
I checked my personal credit report, which I acquired from your organization on [insert date of report] and I noticed an unauthorized inquiry had been made.
I contacted [inquiry source’s name], who conducted the inquiry and asked them to remove their credit inquiry from my credit profile.
I request that you initiate an investigation into [inquiry source’s name] inquiry on my credit report to determine who authorized the inquiry. If, once your investigation is complete, you find my allegation to be true, please remove the unauthorized inquiry and send me an updated copy of my credit report at the address listed above. If you find the inquiry referenced above to be valid, please send me a description of the procedures used in your investigation within 15 business days of the completion of the investigation.
Thank you for your assistance in this matter,
What else should you include with your credit inquiry removal letter?
Be sure to include a copy of the credit report page evidencing the inquiry. It also doesn’t hurt to highlight the section for the credit bureau, just so there’s no mistake. Otherwise, you run the risk of delaying the process and adding additional communications. Take the extra step ahead of time to save potential complications further down the road.
Do you have other negative items affecting your credit scores?
If you have other negative items on your credit report or don’t want to bother disputing credit inquiries on your own, you can retain a firm that can do the work much more efficiently and effectively for you. A professional credit repair firm performs these tasks hundreds of times a day. However, when investigating credit repair companies, be sure to look for a firm with many years experience and many happy clients.
Check out our Lexington Law Firm Review to find out more about the company that has over 25 years of experience and hundreds of thousands of happy clients or call 800-220-0084 for a free consultation to see how they can improve your credit score.