Credit inquiries can remain on a credit report for 2 years. Hard credit inquiries can have a real impact on credit scores, especially if you have multiple inquiries in a short span of time.
What Is a Credit Inquiry?
A credit inquiry is simply a request to look at your credit file. It happens when a business or individual checks your credit history, usually to assess your creditworthiness. Think of it like someone peeking into your financial past to see how responsible you’ve been with borrowing and repaying money.
Types of Credit Inquiries
There are two types of credit inquiries – one impacts your credit score and one does not.
1. Soft inquiry
These happen when you or a third party checks your credit for reasons other than lending decisions. Soft inquiries do not affect your credit score. Examples include:
- Checking your own credit report.
- Credit card companies pre-approving you for offers if you have not opted out.
- Employers conducting background checks (with your permission).
- Insurance companies assessing your risk.
- Your current creditors monitoring how you’re paying other obligations which is known as an “account review.”
2. Hard inquiries
These occur when you apply for new credit. The lender requests your credit report from a credit bureau (Equifax, Experian, or TransUnion) to assess your risk as a borrower. Hard inquiries can slightly lower your credit score, especially if you have many within a short period. This is because it signals to lenders that you might be taking on too much debt. Examples include:
- Mortgage loans
- Auto loans
- Student loans
- Personal loans
- Credit Card Applications
- Credit limit increases
- Apartment rentals
- Utility services
- Cell phone plans
- Retail credit cards
Remove Credit Inquiries
Credit inquiries made without “permissible purpose” can be removed. The Federal Credit Reporting Act (FCRA) gives you the legal authority to dispute erroneous inquiries on your credit report. Additionally, the FCRA states you can sue for damages in the amount of $1,000 for each instance a company pulled your credit report without your permission.
How to dispute credit inquiries with credit bureaus:
- Gather evidence to provide the documents showing the errors.
- Draft a detailed dispute letter to the credit bureau clearly explaining the inaccuracies and provide supporting documentation.
- Submit your dispute via certified mail to maintain supporting documents in the event you have to pursue legal action.
How to dispute credit inquiries directly with the creditor:
- Gather evidence to provide the documents showing the errors.
- Draft a detailed dispute letter directly to your creditor clearly explaining the inaccuracies and provide supporting documentation.
- Submit your dispute via certified mail to maintain supporting documents in the event you have to pursue legal action.
Both the credit bureaus and the creditor have specific timelines to investigate disputes, failure to do so results in the disputed item being deleted.
General Timeline:
30 days: Credit bureaus typically have 30 days to investigate and resolve disputes you submit. This includes reviewing your dispute, contacting the furnisher of the information (like the lender who made the inquiry), and correcting any inaccuracies.
Extended Timeline:
45 days: If you provide additional information related to your dispute during the initial 30-day investigation, the credit bureau may take up to 45 days to complete the investigation. This also applies if you submitted your dispute after accessing your credit report through AnnualCreditReport.com.
Hard Inquiry Dispute Letter Template
[Your Name] [Your Street Address] [Your City, State, Zip Code] [Your Phone Number] [Your Email Address, if any][Date]
Subject: Disputing Unauthorized Hard Inquiry/Inquiries
I am writing to dispute the following information that appears in my credit report. Enclosed is a copy of my current credit report, with the [item/items] in dispute circled and marked with corresponding numbers.
I did not authorize a hard inquiry from [business name] on [date]. I do not recognize this inquiry and did not authorize it. I request [credit bureau] provide documentation proving my authorization for [business name] to make this hard inquiry on [date] or remove it from my credit report, adjusting my credit score accordingly.
[Add as many additional numbered dispute items as necessary.]
Please reinvestigate [this/these] disputed [item/items] promptly and in accordance with the law.
Sincerely,
[Your Name]
SSN:[Your Social Security Number]
Enclosures: Marked-up copy of my credit report indicating disputed [item/items]
Remove Mortgage and Auto Loan Inquiries
Rate shopping. When you’re shopping around for the best rates on loans (like mortgages or auto loans), multiple inquiries within a short period (usually 14-45 days) are often treated as a single hard inquiry by credit scoring models. This is because they recognize you’re comparing offers and not necessarily taking on multiple new debts.
Make sure the credit bureaus properly report mortgage loan or auto loan credit inquiries as one single event when done within a certain timeframe. If each credit inquiry shows up on your credit report, this would definitely lower your credit score.