Credit Inquiries: Who is Checking My Credit and How Does it Affect My Score?
The title of this blog may seem like a dark, mysterious noir novel: one that involves flawed, but handsome detectives spying over suspects and, in the end, finding out they have been played by the very person who employed them.
The reason we allude to the noir genre is because your credit report presents a keen interest to “parties” who want to know about your financial health.
A Credit Report is Not For Your Eyes Only
Most of our readers already know this fact, but we like to repeat what is important. Your FICO score is open to any party who makes an inquiry. But let’s take this one step at a time.
First up, who are the “parties” or people interested in your report?
When you apply for a new line of credit, a house mortgage, or a loan, the lenders whom you approach would present an inquiry on your FICO score.
Second, what constitutes as an inquiry?
A Tale of Two
This where things get a bit interesting. There are two kinds of inquiries: one is known as a “soft” inquiry; the other is known as a “hard” inquiry. The names themselves might not reveal much, but that’s why you have us – to clear all of the doubts.
A soft inquiry on your credit score happens when agencies are simply checking on your score to offer their services and promotions (a credit card), or when you yourself are checking up on your account to see if everything’s fine. These inquiries do not affect your score in any manner.
It is a hard inquiry that affects your score.
How and Why
A hard inquiry is when a lending or mortgage agency is checking your score because you have applied for a loan with them. These inquiries have an impact, albeit small, on your credit score. The impact may vary from person to person, but as a general rule of thumb, 5 points are deducted from your score per credit inquiry. However, there is a special feature that helps you save precious points even when you apply for multiple loans.
The special feature is known as “rate shopping.” What happens here is that if you apply for different loans within a month (or 45 days), the various credit inquiries that then follow will be considered as “one” inquiry.
As we’ve alluded to, there are many miscellaneous things that influence your rating. Inquiries constitute only one facet of a credit score.
Interested in the other ways in which your credit score is calculated? If you’re unsure about the details of your credit report, you should utilize the services of a credit repair agency. At Action Credit Repair, our experts will provide a personalized credit consultation, an audit of your credit history, and offer solutions to all of your credit obstacles. Contact us today to speak with an experienced professional: Call 518-945-2299 or email [email protected].