How much does an inquiry affects your FICO score and how long does it take to go away?
There are two types of inquires Hard inquiries and Soft Inquiries
Definition: A credit inquiry an entry on a credit report that shows a business has requested a copy of the report. “Hard” credit inquiries happen when a business checks your credit report because you’ve made an application for credit. Soft credit Inquires are when you pull your credit report. “Soft” credit inquiries can also be made by businesses/lenders that you already have a relationship with, business who want to advertise products or services to you, and your own credit report inquiries.
Inquiries are also the Credit Reporting Agencies tracking system that tracks when your file is opened or requested.
Ten percent of your credit score considers credit inquiries. In general, the more inquiries that appear on your credit report, the more your credit score will be impacted. Only “hard” credit inquiries affect your credit score.
The Fair Isaac Corporation consumer division
According to the Fair Isaac Corporation consumer division myFICO.com “When you apply for credit, you authorize those lenders to ask or “inquire” for a copy of your credit report from a credit bureau. When you later check your Credit Report, you may notice that their credit inquiries are listed.
You may also see listed their inquiries by businesses that you don’t know. But the only inquiries that count toward your FICO Scores are the ones that result from your applications for new credit.”
In the age of cybersecurity breaches, we need to monitor our credit very closely because you may have an inquiry on your credit report and may not have applied or requested to review your personal file. Thieves can also do a “Soft pull” or “Soft inquiry” just to check the status of your credit before they begin the damage.
Synthetic ID Theft
This is how they create what’s called “Synthetic ID Theft” for more information on synthetic ID theft check out our blog here…
These inquiries on your credit report can cost you 2-5 points apiece in the calculation of your FICO Score. It doesn’t matter If you are responsible for the hard inquiry or not the damage could still happen. Hard inquires can remain on your credit report for up to 2 years however, FICO only considers hard inquiries during the last 12 months.
If you don’t recognize an inquiry you may be a victim of ID theft.
Lets take a closer look
Now, let’s look at the definition for a “Soft Inquiry” from above. “Soft” credit inquiries can also be made by businesses/lenders that you already have a relationship with, business who want to advertise products or services to you, and your own credit report inquiries.
From that definition, you wouldn’t think that debt collectors wouldn’t have the authority to place a hard inquiry on your credit report but they do. I have seen debt collectors routinely place hard inquires on consumer credit reports. The credit reporting agencies allow these debt collectors to setup what’s called a subscriber account in their system.
When a business owner chooses to report their business’s consumer credit information to a credit reporting agency, such as for non-payment of a debt, the business first must become a customer of each credit bureau. A business must become a subscriber to the Credit Reporting Agency’s credit reporting services.
Otherwise, the agency will have no way of including that creditor’s accounts within its database. This service isn’t free, and each agency has its own services that it sells to subscriber businesses. Also, any small business owner who wishes to report consumer credit data to a credit bureau must adhere to and abide by all federal laws regarding such consumer reporting, like the Fair Credit Reporting Act.
Just Pay the Fee
As you can see it doesn’t matter if debt collectors or collection agencies pay the subscriber “fee” they can set up a subscriber account. This allows the debt collectors to inflict maximum damage to consumers. The credit system is not designed to benefit the public it is designed to help business owners maximize profits.
Therefore, it is easy for collection accounts to be passed around from junk debt collector to junk debt collector and the date of last activity is moved several times. A collection agency does not offer credit or insurance so those “HARD Inquires” Should not be on the credit report and affecting the scores but they are….
If you see a collection inquiry the collection agency or debt collector maybe looking for you.
In the event an inquiry was done without your permission or a permissible purpose, you can ask for it to be removed. If the company doesn’t have a permissible purpose for the inquiry then they could be fined up to $1000 per inquiry in damages!!!! Let them know “Under 15 FCRA section 623, you have 30 days to respond and/or remove the inquiry.”
However, I am NOT an Attorney so please seek legal advice. The damages can be up to $2500 in California. We have the perfect inquiry removal letter to get you started.
Feel free to download your copy here….
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