The first step in acquiring credit is a credit inquiry. Hard inquiries impact 10% of your overall credit score.
So you’re looking to take advantage of the benefits of a specific credit card. Maybe you are trying to move in into those luxurious apartments. How about financing your first brand new sports car that just came out. Or just simply you want to start your credit history and start planning your future. It wont be long before you realize that the first step for this is a credit application. This means an inquiry into what is known as your credit file/credit history is made to decide to where or not you get qualified.
Credit inquiries occur whenever someone accesses your credit account. The credit bureaus note this information, recording the date and the name of the company or entity accessing your information.
Hard Inquiries vs. Soft Inquiries
There are two types of inquiries;
- Hard inquiries get reported on your credit report when someone checks your credit for the purpose of considering you for a loan or credit card. These items do impact your credit, so it’s important to understand what they are, why they’re there and how you can limit them.
- Soft inquiries, are mainly informational and have little to do with credit, and don’t have the same impact. They’re also not usually visible to people other than you.
Not all inquiries that show up on your credit report impact your score. Only those that are meant to evaluate you for credit do.
Examples of Hard Inquiries
- A credit card company checking your credit after you applied for a card
- A bank checking your credit because you applied for a car loan
- A company checking your credit before leasing you a car
The key thing to remember with hard inquiries is that you should know they’re about to happen. Your credit can’t be accessed for this purpose without you agreeing to it in writing.
Examples of Soft Inquiries
- You check your credit for informational purposes
- An employer checks your credit as part of a background check
- A credit card company does a soft pull on your credit to prequalify you for an offer
With that in mind, hard inquiries aren’t harmless. They can impact your credit, so you want to keep them to a minimal number when possible. Hard inquiries remain on your credit report for 24 months. How much a hard inquiry impacts your credit depends on a variety of factors, including what your credit score was to begin with. A hard inquiry can bring your score down 2 – 5 points. If you have excellent credit and no other issues, the drop might be even less.
Hard inquiries aren’t necessarily bad. They’re simply an aspect of how credit reporting works. And it’s actually good that this information is recorded. You should be able to see who accessed your personal credit information and why. Hard inquiries are not the most important factor in your score, but they do impact it. That’s because having a large number of hard inquiries on your account looks like you’re desperately chasing credit. That’s not behavior a lender would expect to see from someone with stable finances.
Soft inquiries don’t always require your permission. While employers have to get your permission to run background checks, creditors don’t need permission to run a soft check to prequalify you for marketing offers. You do have the option to opt-out of those marketing soft checks.
What can you do to improve your credit? Can You Remove Hard Inquiries from Your Credit Report?
One option to improve your credit is to manage other aspects of your score responsibly; Make payments on time, keep your credit utilization low and manage multiple types of accounts well. These all have more impact on your credit score than hard inquiries. If your credit is already strong, a hard inquiry won’t impact it as much. If you see inaccurate hard inquiries or credit pulls you didn’t agree to, seek professional help, you have the option to challenge them and ask for verification of your authorization.
Your best option is Credit Services of America. We can help with any all of you inquiries on your credit file. Give us a call for a FREE Credit Consultation where we will evaluate your credit file and help you improve your overall credit score through a personalized plan design just for you. Our expertise in removing obsolete, inaccurate, unverifiable, items off credit files has reached thousands of customers credit and debt goals. We specialize in Credit Repair, Debt Settlement, Student Loan Consolidations, and Trade Lines.
A Goal without a Plan is just a Wish. Give us a call TODAY at 844-FIX-URCR or click on the following link creditservicesofamerica.com to schedule your FREE consultation and create your personalize plan to achieve your credit and debt GOALS!
*Individual results may vary. Please call for more details and to discuss your own individual situation.