When looking at your credit report and through your credit history, you may notice a few things near the end called inquiries. Inquiries are when a creditor, lender, or furnisher checks your credit history and pulls your report for them to view. These reports include the complete credit history of a consumer and an aggregated credit score, usually by either FICO or VantageScore–although FICO is more common. These inquiries can be detrimental if you collect too many of them as each inquiry can bring your credit score down by 2 – 5 points each.
These inquiries are ways for creditors, credit agencies, and bureaus to track your credit activity. Any line of credit, loan, or collection may also appear alongside these inquiries. For example, Quincy opens up a new credit card account with Discover Card. The next time he checks his credit report, a DISCOVER inquiry and a DISCOVER account will both appear on the report. However, if Quincy got denied a credit card by the company, only the inquiry will show.
This means that every time a person applies for a credit card or loan, they will incur an inquiry on their credit report with few exceptions. Inquiries can be avoided if the consumer opens up a new account via a pre-approved credit offer.
Hard and Soft Inquiries
Two types of inquiries can be found on a credit report: hard and soft.
The most common inquiry that will report on every type of credit monitoring history report is the hard inquiry. Hard inquiries are when a creditor, lender, or furnisher decides to check on your credit history to approve you for a new line of credit. However, the exception to this rule is when collection agencies ping the credit bureaus for a report as well. Inquiries need to be approved by the consumer, so these collection agencies may not be in the right legally when they hit someone’s credit report.
Soft inquiries have no impact on someone’s credit score and history, and these usually appear when a bank or creditor does a pre-approval process for a possible revolving credit account or installment loan. Don’t worry too much about these. Most credit reports do not even show these as they have little effect.
Avoiding Hard Inquiries
Inquiries will plant themselves on your credit report whenever you try to open a new account of any kind. This is especially true whenever you may go shopping for a new loan or installment credit account.
For example, Luis wants to buy a new car at a dealership and is trying to get a good loan. The salesman will then try to pull up Luis’s report and credit score to find a lender that will give him a good loan. If Luis has a good credit score, he may only incur a few inquiries; however, if his score is poor or their credit history derogatory, then the salesman will keep pulling credit reports and scores to try out different lenders and furnishers. After all, that salesman doesn’t care about the future of Luis’s score, he only cares about getting Luis in the car.
Luckily, there’s an easy way to avoid this: Get a pre-approved loan from a trusted financial institution. With a good financial and credit reputation, a consumer can go to their bank to get the appropriate loan without incurring so many inquiries.
What to Do If You Get Too Many Inquiries?
Too many inquiries on someone’s credit report can be detrimental to a credit score. Inquiries can last up to two years on someone’s report before they can disappear. Luckily, there are credit repair services that help with these excessive inquiries and help remove them from the credit bureaus. At Fix Your Credit Consulting, we can help with these situations and improve your credit score. Call us at (877) 212-2450, and one of our professional consultants will assist you in understanding your credit report and give you advice on what to do next.
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