You might be tempted to erase queries from your credit report because they can lower your credit score. However, hard inquiries made because you sought extra credit cannot be erased unless they are erroneous or fraudulent. It would help if you didn't waste your time attempting to remove hard inquiries from your credit report because they have a minor impact on your credit score and disappear after two years. Limiting the number of credit applications you make in a short period is a better option.
Credit checks, often known as credit pulls, are a type of credit inquiry
When you apply for services with businesses that extend credit, such as credit card issuers and mortgage lenders, they examine your credit. These companies check your credit to see if you qualify for the account or service you're applying for. Equifax, Experian, and TransUnion, the three major credit bureaus, keep track of all the firms that have requested your credit report or credit score. Your credit report contains a list of all credit inquiries (also known as credit pulls) submitted to your credit report in the previous 24 months. This record appears in a section of your credit report dedicated to inquiries.Credit Inquiries: Hard vs. Soft
Hard inquiries are the only type of credit pull that impacts your credit score that businesses will see on your credit report. Soft pulls are credit inquiries that do not affect your credit score and do not appear on your credit record. You check your report, and a potential employer accessing it during a background check are examples of soft inquiries. Credit card issuers may also make soft inquiries while making promotional card offers. Insurance providers make soft inquiries while you're looking for quotations for various types of coverage. They don't appear on your credit record.The Impact on Scores
According to FICO, one of the two primary companies that generate credit ratings, a hard credit inquiry typically deducts less than five points from your FICO credit score. (VantageScore is the other.) FICO has a range of credit ratings ranging from 300 to 850. Hard inquiries are crucial in determining a FICO Score, but they aren't the most critical factor. According to FICO, the number of hard inquiries in a person's record only accounts for 10% of the total score. Even though a hard inquiry stays on your credit report for two years, FICO only considers hard inquiries from the previous 12 months for calculating your credit score. FICO also recognizes periods when you could be shopping around for the best rate on a specific type of loan, so it aggregates all queries for that loan type into one inquiry—as long as they happen within a reasonable distance of each other. The potential lender's request determines the length of the shopping time; it could be 14 or 45 days. Shopping periods that occur 30 days or less previous to the creation of a score are likewise ignored by FICO. If you're rate shopping, try to do it in a short period so that the many inquiries can be consolidated.Why Do Lenders Use Them
Because credit inquiries can disclose if you've recently applied for credit, potential creditors can try to predict whether you've recently taken on other debt that will make it more challenging to repay the credit card or loan you're looking for. According to FICO, consumers with six or more queries on their credit record are up to eight times more likely to file for bankruptcy than those with no questions. That's why the corporation considers recent complex queries when calculating credit scores—and why lenders consider them when deciding whether or not to extend credit.Unfamiliar Inquiries Must Be Verified
Reviewing your credit reports regularly is critical to guarantee they're free of inaccuracies. If you see any unusual credit queries on your record, you should try to verify them first. Request that the company in question clarify the nature of their inquiry. Experian describes four instances in which a legitimate hard inquiry can look to be bogus:- Someone who performed a home repair for you may have looked into your credit history to see if you could be trusted to pay the cost.
- Your request could have been forwarded to more potential lenders than you expected if you shopped for the best online mortgage rate or worked with a mortgage service provider.
- A car dealership, for example, may have sent your auto loan application to many banks to find you the best interest rate.
- Suppose you applied for a credit card to use at a particular store. In that case, the inquiry may not specifically name the store but the bank that manages the store's credit card program.
Getting Rid of Inaccurate Inquiries
By submitting a dispute with the credit bureau, you can get any inaccuracies deleted. According to the directions on the credit bureau's website, you can do so online, via phone, or in writing. It would help if you also inquired with the credit bureau regarding the potential that any inaccuracies were caused by identity theft. To avoid further unauthorized queries and possibly the opening of bogus accounts, consider setting a fraud alert or security freeze on your credit report. The credit bureau is legally obligated to investigate the company whose query you're contesting. If the investigation reveals that the query was included in error on your report, it will be removed.Getting Rid of Legitimate Inquiries
Attempting to delete an inquiry generated from an application you submitted is nearly impossible. Credit bureaus are legally obligated to submit correct information within the legal timeframe for credit reporting. You won't be able to delete queries from your credit report just because you choose not to open a new line of credit or because you don't enjoy having them there. Hard inquiries, fortunately, are not a significant source of anxiety. For a year, they will only have a minor impact on your credit score. You can also reduce the number of hard inquiries on your credit report by limiting the number of credit applications you make in a year.