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Credit Repair: The Question Of Inquiries

Mar 23, 2008
What's Up With Those Inquiries?

What's up with all those inquiries on your credit report? Where did they come from? Do you have to authorize them? Do they hurt your scores? Can they be removed? A nationally recognized credit repair expert answers these questions, and more.

Setting Your Priorities

Inquiries may hurt your credit score, or they may do nothing. If you are in a credit repair program there are probably bigger issues on your credit report than inquiries. Since it is best to focus on cleaning up the items that have the greatest impact, your inquiries may be left until everything else is resolved. Even then, you may decide to ignore the inquiries, but before we dismiss them altogether let's explore a bit further.

Two Types of Inquiries

There are two types of inquiries. "Hard" inquiries will affect your credit score, and occur when you apply for new credit. "Soft" inquiries will not affect your credit score, and are typically triggered by three different events; 1) when you request your own credit report, 2) when potential lenders check your credit prior to offering you pre-approved credit, and 3) when a current lender conducts a periodic review of an existing account.

The Logic of Inquiries

There is logic behind the impact inquiries have on your FICO score. If you are applying for new credit you may be in the process of incurring new debt and placing an additional strain on your budget. Hence you are placed in a higher risk class, designated by a lower credit score.

Rate Shopping

The FICO scoring model was recently modified to accommodate consumers that shop for mortgage or automobile financing. You may now have as many inquiries as you wish in a 45 day period while shopping for a mortgage or automobile loan, and they will only have the impact of a single inquiry on your credit score. To further accommodate this type of shopping, these inquiries will not appear at all for 30 days. Many credit repair customers are relieved to find out that the many inquiries which appeared after they purchased a new car had little or no impact.

Inquiries and your FICO Score

Soft inquiries, as mentioned, have no impact on your credit score. Hard inquiries typically will lower your score between 1 point and 5 points. Credit repair efforts revolve around your credit scores, and it is handy to know that the FICO scoring model considers everything on your report simultaneously. The affect of an inquiry, like other bits of information on your report, can vary depending on everything else in your file. The more credit you have, and the more established it is, the less of an impact an inquiry will have.

Time and Your Credit

Time plays an important role on the impact of an inquiry. As the months slip by the affect of an inquiry diminishes quickly. After six months the affect is negligible. If you are in a credit repair program and are deciding if you want to dispute inquiries, you want to keep this in mind. And if all of those inquiries bother you, it may be helpful to know that soft inquiries fall off your report after 12 months, and hard inquires after 24 months.

Opting Out of Inquiries

Would you like to stop all the pre-screened credit and insurance offers you get, along with all of the soft inquiries that precede them? You may do so by calling (800) 5-OPTOUT. You will be given the option of opting out for 5 years, or permanently. Many of our enthusiastic credit repair customers choose to opt out to reduce the amount of junk mail they receive, which is a nice benefit! But remember that soft inquiries have no impact on your scores, and there is some possibility that you may miss out on some legitimately great offer.

Inquiry Errors Hurt Your Score

In the credit repair business we look at inquiries as a matter of course. Often we decide to ignore them and focus on more pressing issues. Sometimes we return to inquiries for a final clean up when a customer is at the end of the program. It should be noted that not all soft inquiries are properly coded, and as a result may show up as hard inquires and lower your score.

Identity Theft

The last and more urgent warning about inquiries involves the uncomfortable possibility that someone is applying for credit under your name. If you see a hard inquiry on your report you might want to contact the creditor to see if there is an active or pending application in your name. Chances are it is just another stray or improperly coded entry on your report, but it is best to be sure.

Copyright 2007 James W. Kemish. All Content. All Rights Reserved.
About the Author
Jim Kemish, a nationally recognized credit repair expert, is the president of Sky Blue Credit, a leading credit repair business since 1989. Jim is also the president of Power Mortgage, a Florida mortgage company.
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