Explain Credit Inquiries

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Is there a way to clear inquiries off of my credit?

We all have them. Most of us aren't sure where they came from or how long they are staying. No, we're not talking about in-laws! We're talking about inquiries on our credit reports. Inquiries are one of the most confusing and least understood aspects of the credit reporting system. Here's the skinny on inquiries and how you can manage them:

What are inquiries?
An inquiry is a record of someone checking your credit information. Inquiries come in two distinct categories: "hard inquiries" that occur when a business views your credit report for the purpose of an application and "soft inquiries" that occur when your credit is checked for other reasons. If you apply for a new credit card, a hard inquiry record will appear on your credit report and may cause a drop in your credit score of about 5 points. When you check your own credit report, it is considered a soft inquiry and will not harm your credit score.

Why are inquiries recorded?
Inquiries are recorded so that potential creditors and lenders can view how often you have applied for new credit. Potential creditors may think you are trying to spend beyond your means if there are too many inquiries on your credit report. You can still shop around for a loan; multiple inquiries for the same purpose in a short amount of time are commonly grouped into one less harmful inquiry session. Inquiries are also helpful for consumers because they can notify you of a potential identity thief applying for accounts in your name.

How long do they last?
Most hard inquiries remain on your credit report for two years from the original placement. All inquiries must stay on your credit report for at least a year. You are allowed to dispute inquiries on your credit report, but it can be difficult to prove that the inquiry is indeed inaccurate. If you are unsure of where an inquiry came from, try contacting the company listed before sending off a letter of dispute.

Who can place an inquiry?
According to the Fair Credit Reporting Act, only people with legitimate business needs can access your credit information. This includes creditors, lenders, insurers and landlords who need to review your credit as a part of an application process.

Can requesting your own credit report bring your credit score down?
When you check your own credit report online it does not cause a damaging "hard inquiry" to be recorded. Only when a potential lender or creditor pulls your credit report for the purpose of extending credit does this type of record appear.

Each hard inquiry can cause up to a 5 point drop in your credit score. Multiple inquiries within a short amount of time, like when you are shopping for a mortgage, are grouped together to lessen the impact. The actual amount of damage depends on the number of inquiries, time period and other factors on your credit report. Each hard inquiry will remain on your credit report for 2 years.