Credit Inquiries Dragging You Down? See How Credit Repair Can Help
(United Voice) – Credit inquiries can sometimes lower a credit score, and it’s commonly thought that all inquiries can do this, and thus you should minimize them as much as possible. While this is mostly true, the reality is a little bit more nuanced. Removing inquiries from your score is not always possible, but you can take steps to reduce how much they impact it.
Hard Vs. Soft Credit Inquiries
First of all, it’s important to understand that there are two kinds of credit inquiry or check. These are generally referred to as “soft” or “hard” inquiries.
Soft credit checks are typically done to:
- Provide pre-approved offers
- Do background checks for employment
- Allow somebody to check their own credit.
Soft credit checks do not affect a consumer’s credit score. Every time somebody receives one of those pre-approved credit card offers in the mail, the company did a spot check. These kinds of checks can be done without your consent.
Hard credit checks are done to actually approve you for credit or a loan.
A hard credit check cannot be done without consent, and typically you know when one is coming. Hard inquiries are used to make the final decision whether to extend a loan, what interest to offer, etc.
Hard inquiries do affect your credit score.
Can Somebody Use Credit Repair to Remove Inquiries From Their Score?
The short answer is: No. Credit repair cannot be used to remove the effect of hard inquiries from a consumer’s credit score.
However, credit repair can be used to remove fraudulent inquiries. As hard inquiries require consent, one which appears on a credit report without warning is an indication of fraud or identity theft.
Fortunately, hard inquiries only cause a very small dip in a consumer’s credit score, and that dip goes away after a year, although the inquiry stays on the person’s record for two years.
How To Reduce or Avoid Damaging Hard Inquiries?
Hard inquiries typically become a problem when somebody has a large number of them in a short period of time. This can make them look like a bad risk to lenders, by making it look as if they are in a bad financial situation and desperate for funds.
So, what ways are there to avoid these damaging credit hits? Here are some tips:
- Don’t frivolously apply for credit. Most people don’t need more than one or two credit cards. Don’t get a store credit card just for the loyalty discount.
- Check your credit report regularly (this will not impact your score) so that you spot fraudulent inquiries quickly.
- If you are applying for a mortgage or other loan, plan ahead and group the inquiries close together. This makes it obvious that you are rate shopping or similar, not trying to get lots of credit at once. For example, FICO considers similar inquiries within 45 days as a single inquiry. So, even if you seek approval from six or more different mortgage lenders, it will still only count as one inquiry. VantageScore has a tighter limit, 14 days. The best thing to do is get all of your rate shopping done in as short a period of time as possible. Note that this does not apply to credit card inquiries. Avoid applying for more than one credit card at a time if possible.
Bear in mind that hard inquiries don’t actually have that much of an impact on your score. However, they are still best avoided, in addition to practicing other good credit habits such as paying everything on time and keeping your utilization of a credit card or line of credit low.
Hard credit checks cannot be removed from a credit score. However, they have a low impact, which can be further reduced by grouping them together, and will naturally age off of the report. While it is best to minimize them, don’t worry about the effects too much, and don’t let them stop you from being savvy when shopping for a loan.
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