Inquiring Minds
Your credit reports show a history of all inquiries made into your credit. This section shows who has been asking about you, and you may be surprised to see how many people care about you. Inquiries will remain on your credit report for up to two years.
Hard Inquiries
Hard inquiries are the most important as far as your credit scores go. Hard inquiries are inquiries that happen anytime you apply for new credit. The potential lender checks you out by pulling your credit, and a history of this activity stays in your credit files. Why would this be important? If you run all over town asking for credit, it could be a sign of trouble. Lenders want to know if you are opening up a bunch of new accounts at once. In fact, each hard inquiry costs your FICO credit score a few points (less than five).
Hard inquiries will be shown on your credit reports with the following details:
Name of the inquiring company
Contact information for the company
Date of inquiry
If you use a merged, or 3-in-1, credit report, you will also see which credit-reporting company reported the inquiry.
See if you can figure out exactly when your lenders report to the credit-reporting companies. If they report at the end of the month, send payments in before that date. That way, your balances look lower, and you can boost your credit score. Even if you pay in full each month, your credit reports might always show a balance.
Soft Inquiries
Soft inquiries are inquiries that do not affect your credit score. In fact, you might be the only person that can view these inquiries. Your prospective lenders do not see them, and they are not included in the inquiry count in your credit report's summary.
After you open a credit account with a lender, they periodically check in on you to see how you are doing. No, they don't call you up to ask how you are. Instead, they pull your credit. They want to see if you are taking on too much debt, or if anything else of interest has happened. Note that these inquiries are the ones that can get you in trouble with a variety of lenders. If you have universal default clauses on your credit cards, these inquiries will let them know if you've defaulted or paid late anywhere else.
Watch your inquiries for signs of identity theft. If you see a bunch of new inquiries and you cannot figure out where they came from, you should make sure it's not an identity thief. Inquiries will be the smoke before the fire, and you can limit the damage by alerting the credit-reporting companies early.
Promotional Inquiries
You will also see a slew of soft inquiries that are promotional inquiries. These inquirers do not get to see your entire credit report, but they learn something about you. When you get a preapproved offer, chances are it is a result of a promotional inquiry — you met their criteria for the marketing campaign. Note that you can opt out of those offers by telling the credit-reporting companies to stop selling your information. Alternatively, you can call 888-5-OPTOUT to opt out for two years.
Who Gave You the Right?
Your credit report contains sensitive information. A credit inquiry can give somebody a wealth of information about your finances, and it might not be any of their business. In addition, hard inquiries can ding your score up, and having too many will make your loans more expensive or unobtainable.
For the reasons listed above, there are limitations on who may request your credit report. An inquirer must have permissible purpose when requesting your credit. If they don't have permissible purpose, they can't get the report without your permission. Credit-reporting companies may provide your credit reports in these situations:
As required by a valid court order
With your written permission
For a credit transaction
For employment decisions
For underwriting insurance
In the application process for some licenses
Ongoing checkups of existing customers
Some procedures related to child-support awards
As you review your credit reports, see who is asking about you. If they do not appear to have a permissible purpose, they may be violating some serious laws. You can stop them from requesting your credit reports.
