Can the Removal of Hard Inquiries from Your Credit Report Help Increase Your Credit Score?

Hard inquiries on your credit report can significantly affect your credit score, though their impact depends on several factors. Understanding how these inquiries are calculated and how to remove unauthorized ones can help you maintain or improve your credit score.

How Hard Inquiries Affect Your Credit Score

Hard inquiries, also known as credit checks, occur when a company checks your credit report with the intent to make you an offer or decision related to credit. While inquiries are visible on your credit report for up to two years, their impact on your credit score is more significant in the first year. More specifically, most creditors focus on inquiries made within the last six months of when you apply for credit.

For auto loans, student loans, or mortgages, inquiries made within 45 consecutive days or less are typically counted as a single inquiry for most FICO scoring models. However, for other types of credit applications, such as credit cards, each inquiry can impact your score independently. Some lenders may be sensitive to even three inquiries within six months, while others may approve applications with a dozen or more inquiries.

It's important to note that certain inquiries, such as those related to your job search or credit accounts, are not counted against your credit score and can help build your credit history. However, overzealous inquiries, particularly from one source, can harm your score. For instance, if an overeager finance manager conducts a credit check with 20 different lenders on the same day, it appears as multiple inquiries, but the impact on your credit score may be equivalent to a single inquiry.

Common Sources of Hard Inquiries

Hard inquiries can be made without your knowledge, often due to minor changes in your lifestyle. You might have inadvertently signed documents with authorization for hard inquiries, or you might not have thoroughly read the terms of service agreements with service providers like your internet or cable service, your car financing, or even your landlord.

One common scenario is applying for a new credit card or increasing your credit limit. Even upgrades to your credit card can result in a hard inquiry. Similarly, if you are shopping for an auto loan, you might authorize one dealer, only to find out later that they conducted multiple inquiries on your behalf without your explicit consent.

Handling Unauthorized or Malicious Inquiries

Given the potential impact of unauthorized inquiries, it is crucial to ensure that all inquiries are legitimate. If you find a hard inquiry on your credit report that you have not authorized, it could either be due to a reporting error or fraudulent activity. Here are steps to take:

Identifying the Inquiry

To identify the source of hard inquiries, you can use tools like Intelligent Finance Tool from mymoneykarma. This tool highlights the source of all hard inquiries on your credit report, helping you pinpoint the lender involved.

Contacting the Lender

Once you have identified the lender, you can search for their contact details and reach out to them directly. Explain the situation and ask for a resolution or an explanation.

Filing a Dispute with Credit Bureaus

If the inquiry is a result of a reporting error, you can file a dispute with the credit bureau to have it corrected. However, if it is a case of fraud, you need to notify both the credit bureau and your card issuing company immediately to secure your account and minimize any potential damage.

By being proactive and monitoring your credit report, you can ensure that your credit score reflects your financial behavior accurately and that unauthorized inquiries do not negatively impact your creditworthiness.