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Credit
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LOAN SHOPPING CAN HARM YOUR CREDIT SCORE
Shopping for credit online can
have serious hazards to your credit report. Every time you
shop for a loan it results in a credit
inquiry. Those individual inquiries can reduce your credit
score. Credit scores range from 300 to 900 with 900 being
best. Each time you apply for credit, your credit reports
will place an inquiry at the bottom of your reports. While
a few inquiries are fine, too many can result in lowering
your credit score and denial of credit.
Creditors or potential lenders look
at too many inquiries as "desperate" and base part
of their credit decision on those excessive inquiries.
In addition, the potential creditor has no idea that those
inquiries have not resulted in a recent loan which could disqualify
you from being approved. The good news however, is scoring
models have now been adjusted to count multiple inquiries
within a 14-day period as a single request.
Too many inquiries seems to be the topic
of the day with consumers. Many don't realize the impact of
too many inquiries and only begin to understand the affects
after being turned down for loans because of it.
Protect yourself
and your credit score by following a few simple rules:
Reduce & unauthorized: You should
limit your inquiries and dispute any that you do not recall
or agree with. Disputing inquiries to the credit bureaus is
pointless. They are not responsible for removing those and
do not investigate them unless the originating creditor instructs
them to. Take your complaint directly to the lender with
a certified letter.
You reviewed your credit: This is
where you have have requested a copy of your credit report.
This is a "soft" inquiry and does not negatively
affect your credit. It is not seen by potential creditors.
(Neutral)
Credit Bureau Review: This again,
has no impact on your credit and simply means the bureau reviewed
your file. (Neutral)
Creditor review: This is simply a
standard review that is done by existing creditors. It also
does not impact your credit. (Neutral)
Credit Request: This can be negative
if you have too many. Inquiries remain in your profile for
2 years, so too many of this type can be negative and result
in denials. (Negative)
Collection agency review: Very negative.
If you have any inquiries from a collection agency who has
begun collecting on an expired debt (expired
under the statute for reporting, which is 7 years) then
that does not qualify for a permissible purpose and should
be removed. Inquiries from a collection agency are very negative.
IRS: Very negative. Inquiries from
the IRS usually tell a potential lender that you are either
being audited or have a tax
lien pending.
Tenant Screening: This type of inquiry
is O.K. It simply shows you are moving or did move and the
landlord ran a credit check. (Neutral)
Dispute Process
To dispute inquiries you need to write to the creditor direct.
Simply send a certified or registered letter to the creditor
and ask for removal.
Here is a sample of what to write:
Dear Creditor:
In a recent review of my credit reports
I discovered an inquiry from your company. I do not recall
authorizing you to review my credit. Accordingly, I would
like to be sent proof that I initiated or requested for you
to review my credit. Please respond at your earliest convenience.
Based on the FCRA, I must have authorized
you to review my credit with written permission. Please forward
a copy of that written authorization. If you are unable to
provide me with proof or do not retain records of such authorization,
please promptly remove the inquiry from my credit report (name
which credit bureau) and send me written confirmation of the
removal.
Thank you for your timely reply.
Sincerely,
Joe Consumer
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