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CREDIT INQUIRIES
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.
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. There are different
types of inquiries and some are nothing to worry about. The
following is an example of inquiries and what they mean.
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
Although inquiries will remain on your file
for up to 2 years, those in the last 6 months will count most
heavily against you. Therefore, you should review the log
to make certain that each inquiry was done with "permissible
purpose" as explained in Section 604 of the Fair Credit
Reporting Act (FCRA.) The FCRA defines the "permissible
purposes" for which consumer credit profiles can be provided
to others. A credit report may be supplied if it's to be used
for:
-Credit granting considerations
-Review or collection of an account
-Employment considerations
-Insurance underwriting
-Application for a government license
-With your written permission
-Or in response to a court order
-*FBI investigation
*The new FCRA, enacted in 1996, allows the
FBI to access consumer credit reports in connection with an
investigation of issues such as counterintelligence. So unless
someone fits these categories, they should not be viewing
your credit file. Anyone who knowingly and willfully obtains
a credit report under false pretenses may be fined under title
18, United States Code, and imprisoned up to two year.
If you don't have a lot of items to dispute,
go ahead and send your letter to the credit bureau. However,
if you know you are going to be sending the bureau several
letters on other items over the next few months, you should
try to take care of this with the creditor who requested your
file. If you can take care of it by having them contact the
bureau directly and deleting the request, then it is just
one less letter you will have to send to the bureau yourself.
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