A Hard inquiry is a specific type of credit inquiry. This is in relation to a consumer’s credit report and score. This article will discuss several important aspects regarding the same.
Realistically speaking, any entity i.e. corporation, person, bank, lender, etc. can pull out your credit reports. Most consumers are not aware of this, but their credit reports get checked numerous times without their knowing it. More often than not, these are from entities that have something to sell and want to see if the consumer pre-qualifies for their “promotional offer”.
Any credit inquiry that was not expressly authorized by the consumer is a soft inquiry. This means that it should not be included in a credit report in the first place. And, even if it does, it should not be considered in calculating the credit score. Why? This is because the consumer had no control over the actions of the inquiring entity. In some cases, the credit bureau should not have even provided the information.
Any credit inquiry by any entity that has your EXPRESS authorization. This usually means in writing. Some consumers are not even aware that they have already signed an express authorization. This is because the same is included in the terms and conditions, is an oversimplified “check box”, or the consumer was just not paying attention.
As a general rule, any application for the facility of credit will involve you signing a waiver. This includes personal loans, auto loans, home loans, application for insurance, application for utilities, application for a mobile phone, credit card application, checking account application, etc. In fact some employers pull out credit reports for individuals who are applying for a highly confidential or finance related position.
Whenever you sign anything that involves you applying for something, ask the representative if the waiver includes the pull out of your credit reports and if they will pull out your credit reports. While you are at it, ask what credit reports they will pull out. If they say, they may or may not, it usually means they will.
Important Tips to Remember
A popular myth is that credit inquiries will ruin your credit score. In reality it can lower your score but only by a few points. Unless you lack credit history, and do not have various types of credit available (i.e. checking, credit card, loans, etc.) the same is not too significant.
There are however instances wherein checking the credit inquiry section of your credit report can help you earn a few points back. First, if you are sure about every express waiver you made, and there are hard inquiries listed on your credit report that you did not authorize, you can dispute the same. Second, if you see a credit inquiry that is already more than 2 years old but is still reported, you can dispute the same.
You can dispute the hard inquiry online, on the phone, or by writing a dispute letter. Make sure you address the letter to the credit bureau that listed the information on its credit report. The contact information can be found on the credit report itself.