Credit Report Copy

Credit Reports: Inquiries – A Silent Killer

People are typically aware that delinquency and having a high level of debt can smash a credit report to pieces.  However, what many people do not realize is that multiple inquiries on credit reports can also have a detrimental affect.  Under certain circumstances, the rating may drop by a small amount each time creditors or financiers pull up a copy of your credit report.  While shopping for credit cards or vehicles, for example, this is a common occurrence, as credit reports will be requested before anyone will even begin to see if a buyer is qualified.

There are several types of inquiries, and are recorded every time information is requested from a person’s credit file by a company or creditor.  Some inquiries, known as “soft inquiries”,  have no effect on the credit rating of the person being inquired about.  Pre-screening by a credit bureau before sending the information to the credit-card-issuing bank falls also under these so-called “soft inquiries”.  Creditors may check their customers credit files from time to time with no effect on the rating.  Luckily, people can also check their own credit rating without it having an adverse affect.

Other inquiries which can have an effect on the rating are known as “hard inquiries”, and are typically made by lenders when people search for credit or loans.  Once they have been granted permissible purpose, lenders can “pull” the consumer’s ratings, for the purpose of determining whether the consumer qualifies for credit.  Hard inquiries directly affect the rating on a consumer’s file, and minimizing them can help protect a person’s rating.  Some lenders perceive multiple hard inquiries over a short time as a sign of financial hard times, and may not want to extend credit to a “poor credit risk”.

Credit reports should be monitored well, and caution taken to avoid being adversely affected by these hits.  Any requests for a credit file should be weighed heavily, and taken with more serious consideration than many give it.

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