Credit Inquiries’ Effects on Your Credit Report
Posted in Credit on 03/08/2010 01:41 am by admin
The CreditLawGroup asked:
Involuntary credit inquiries, or soft inquiries, are credit inquiries made by a third party without consumers’ knowledge or consent. These involuntary credit inquiries do not affect our credit rating or score; however, these involuntary credit inquiries do indeed show up on consumers’ credit reports. An example of an involuntary credit inquiry would be a company pulling a consumer’s credit report to see if he or she qualifies for a promotional offer or to verify that a consumer has a solid enough credit report to be pre-approved for a product or credit line. Another example of an involuntary credit inquiry would be credit inquiries of a consumer that is an existing customer or client. For instance, after the initial credit inquiry that a credit card company makes, any subsequent credit inquiries after the consumer has been retained by the credit card company are recorded on the consumer’s credit report but are not counted against the consumer and factored into his or her credit score. Yet another example of an involuntary credit inquiry would be from a prospective employer and like the other credit inquiries discussed above do not affect our credit score or rating. The bottom line is if a consumer does not apply for credit or give a company permission to obtain a copy of his or her credit report, it is almost definitely an involuntary credit inquiry and will not be viewed as unfavorably.
Voluntary credit inquiries, or hard inquiries, are credit inquiries made by a third party with a consumer’s consent or authorization. These voluntary credit inquiries show up on consumers’ credit reports and affect consumers’ credit scores and histories. For example, if a consumer were to apply for a credit card, cell phone, private loan, mortgage, student loan, auto loan, or any other type of credit from a credit granting institution, the consumer’s credit report would reflect these inquiries. Numerous voluntary credit inquiries on a consumer’s credit report may appear unfavorable to credit grantors because it seems as though the consumer may be desperate in their efforts to obtain credit from anyone willing to extend it to him or her. Numerous voluntary credit inquiries may also make the consumer appear to be high a risk of default. A few credit inquiries may not affect a consumer’s credit history negatively because it may show that the consumer is responsible to manage numerous lines of credit appropriately. However, more than a couple of involuntary credit inquiries set up a red flag for the consumer as a risky borrower. Luckily, there are 2 rules in place aimed to protect consumers that shop around for the best deal on automobile loans and mortgages, and consequently, would have numerous voluntary credit inquiries.
1. Within 30 days that FICO credit scoring takes place, all mortgage and automobile credit inquiries will not be factored into a consumer’s credit scoring.
2. Within a 14 day period, all mortgage and automobile credit inquiries will be counted as only one inquiry. This rule, called de-duplication, is set in place to not punish a consumer that is responsibly shopping around for the best rate. Furthermore, if a consumer is shopping around for the best rate, it is wise to get estimates as close to each other as possible so that the rates that are offered on that particular day stay correlated with one another for matching purposes.
Personal credit inquiries are considered soft inquiries and do not affect your credit score negatively. In fact, personal credit inquiries are encouraged to be executed rather frequently as part of a responsible credit management regimen. In inquiring about one’s credit history very frequently, a consumer is able to realize if there are any inaccurate or misleading information contained in his or her credit report.
ALVIN
Involuntary credit inquiries, or soft inquiries, are credit inquiries made by a third party without consumers’ knowledge or consent. These involuntary credit inquiries do not affect our credit rating or score; however, these involuntary credit inquiries do indeed show up on consumers’ credit reports. An example of an involuntary credit inquiry would be a company pulling a consumer’s credit report to see if he or she qualifies for a promotional offer or to verify that a consumer has a solid enough credit report to be pre-approved for a product or credit line. Another example of an involuntary credit inquiry would be credit inquiries of a consumer that is an existing customer or client. For instance, after the initial credit inquiry that a credit card company makes, any subsequent credit inquiries after the consumer has been retained by the credit card company are recorded on the consumer’s credit report but are not counted against the consumer and factored into his or her credit score. Yet another example of an involuntary credit inquiry would be from a prospective employer and like the other credit inquiries discussed above do not affect our credit score or rating. The bottom line is if a consumer does not apply for credit or give a company permission to obtain a copy of his or her credit report, it is almost definitely an involuntary credit inquiry and will not be viewed as unfavorably.
Voluntary credit inquiries, or hard inquiries, are credit inquiries made by a third party with a consumer’s consent or authorization. These voluntary credit inquiries show up on consumers’ credit reports and affect consumers’ credit scores and histories. For example, if a consumer were to apply for a credit card, cell phone, private loan, mortgage, student loan, auto loan, or any other type of credit from a credit granting institution, the consumer’s credit report would reflect these inquiries. Numerous voluntary credit inquiries on a consumer’s credit report may appear unfavorable to credit grantors because it seems as though the consumer may be desperate in their efforts to obtain credit from anyone willing to extend it to him or her. Numerous voluntary credit inquiries may also make the consumer appear to be high a risk of default. A few credit inquiries may not affect a consumer’s credit history negatively because it may show that the consumer is responsible to manage numerous lines of credit appropriately. However, more than a couple of involuntary credit inquiries set up a red flag for the consumer as a risky borrower. Luckily, there are 2 rules in place aimed to protect consumers that shop around for the best deal on automobile loans and mortgages, and consequently, would have numerous voluntary credit inquiries.
1. Within 30 days that FICO credit scoring takes place, all mortgage and automobile credit inquiries will not be factored into a consumer’s credit scoring.
2. Within a 14 day period, all mortgage and automobile credit inquiries will be counted as only one inquiry. This rule, called de-duplication, is set in place to not punish a consumer that is responsibly shopping around for the best rate. Furthermore, if a consumer is shopping around for the best rate, it is wise to get estimates as close to each other as possible so that the rates that are offered on that particular day stay correlated with one another for matching purposes.
Personal credit inquiries are considered soft inquiries and do not affect your credit score negatively. In fact, personal credit inquiries are encouraged to be executed rather frequently as part of a responsible credit management regimen. In inquiring about one’s credit history very frequently, a consumer is able to realize if there are any inaccurate or misleading information contained in his or her credit report.
ALVIN