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Credit Inquiry
Credit inquiries – An inquiry is noted
every time a company requests some information from a consumer's credit file.
There are several kinds of inquiries that may or may not affect one's credit
score. Inquiries that have no effect on the creditworthiness of a consumer (also
known as "soft inquiries") are:
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Prescreening inquiries where a credit bureau
may sell a person's contact information to an institution that issues credit
cards, loans and insurance based on certain criteria that the lender has
established.
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A creditor also checks its customers' credit
files periodically.
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A credit counseling agency, with the
client's permission, can obtain a client's credit report with no adverse
action.
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A consumer can check his or her own credit
report without impacting creditworthiness.
Inquiries that do have an effect on the
creditworthiness of a consumer (also known as "hard inquiries") are made by
lenders when consumers are seeking credit or a loan, in connection with
permissible purpose. Lenders, when granted a permissible purpose, as defined by
the Fair Credit Reporting Act, can "pull" a consumer file for the purposes of
extending credit to a consumer. Hard inquiries from lenders directly affect the
borrower's credit score. Keeping credit inquiries to a minimum can help a
person's credit rating. A lender may perceive many inquiries over a short period
of time on a person's report as a signal that the person is in financial
difficulty, and may consider that person a poor credit risk. |
