By Carla Fried | American Express Credit Intel Freelance Contributor
6 Min Read | October 28, 2020 in Credit
When you apply for a loan or a new credit card, your credit report will receive a hard inquiry that can lower your credit score – but typically by only a few points.
A legitimate hard inquiry usually can’t be removed. But it disappears from your credit report after two years, and typically only impacts your score for about one year.
If you find an unauthorized hard inquiry on your report you can file a dispute and request that it be removed.
Whenever you apply for a loan or new credit, lenders usually ask for a close look at your credit report. With your permission, lenders and other creditors make a “hard inquiry” so they can review the details of your personal financial life to help them consider whether to approve your application and what terms to offer you if they do. Each hard inquiry can cause your credit score to dip – yet another reason to regularly monitor your credit report and credit score.
In the event you discover an unauthorized hard inquiry, there are steps you can take to file a formal dispute and request that the hard inquiry be removed from your credit report. Here’s what you need to know about how the credit bureaus handle inquiries, the impact of certain types of inquiries, and how to request the removal of an unauthorized hard inquiry from your credit report.
Before you request to remove any inquiry from your credit report, it’s worth knowing that in the world of credit reports your file includes both “soft” inquires and “hard” inquiries – and you thought only taco shells came in hard and soft versions.
If you receive a preapproval marketing pitch for a credit card, that’s likely the result of a soft inquiry. If you then follow through and apply, that triggers a hard inquiry, which is also sometimes called a “hard pull.”
Only hard inquiries can impact your credit score, and federal regulations require any business that wants to make a hard inquiry to first get your permission.
Hard inquiries on your credit report, along with any new accounts you’ve recently opened or loans you’ve received, together account for 10% of your FICO score. FICO credit scores are the most widely used by lenders and creditors. Even though a hard inquiry will hurt your credit score, it’s generally only a minor dip. FICO says a single hard inquiry will typically cause a drop of less than five points.1 To learn more about how different factors influence your credit score, see “What Affects Your Credit Score.”
When you discover an unauthorized hard inquiry, it’s a good idea to check if your credit report is also listing a new credit card or a loan that you don’t recognize. That could indicate identity theft – more about that later.
If you see an unauthorized hard inquiry without an associated fraudulent account, you can request that the unauthorized hard inquiry be erased from your account by filing a formal dispute with the credit bureaus. Because the government and the credit reporting industry recognize credit reports can be error-prone, they provide a way to dispute your credit report. Here are the main steps:
The two most popular credit scoring models don’t ding you for being a smart consumer who shops around for the best loan. FICO typically doesn’t factor in similar hard inquiries from different lenders if they’re made within 30 days. This applies when you’re shopping for car loans, mortgages, and student loans. A new version of FICO that lenders may use counts all similar checks made within 45 days as one hard inquiry – but it usually takes years for lenders to adopt new credit scoring models, so banking on 30 days is safer.
The VantageScore system developed by the three major credit bureaus has a two-week window for similar hard inquires, recording them as only one.2
Whether you prefer do-it-yourself credit report monitoring or use a credit monitoring service to keep an eye on your reports, it’s important to watch for and act on any unauthorized hard inquiries that show up. They can be a sign you’re a victim of identity theft.
Identity thieves usually piece together enough of your personal information to apply for a loan or credit card posing as you, which will trigger a hard inquiry on your report. If that happens, it’s a good idea to contact the lender or credit card issuer ASAP, alert them to the fraud, and follow their directions for shutting down the account.
You may also want to consider placing a fraud alert on your credit report, which makes it harder for thieves to open a new account posing as you. An even stronger protection is to put your credit report under a credit freeze. A freeze prevents any business from making any type of inquiry. When you’re shopping for a loan or credit, you can “unfreeze” your credit report to allow an authorized hard inquiry to go through.
The IdentityTheft.gov website maintained by the Federal Trade Commission (FTC) has a free step-by-step guide to help you deal with identity theft.3
Lenders and creditors will ask your permission to make a “hard inquiry” check of your credit report when you apply for a loan or credit. An authorized hard inquiry stays on your credit report for two years and can have a small negative impact on your credit score for up to a year. If you find an unauthorized hard inquiry on your report you can file a dispute and request it be removed.
2 “How Rate Shopping Can Impact Your Credit Score,” TransUnion
3 “IdentityTheft.gov,” Federal Trade Commission