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Credit scores, credit reports, and credit agencies are all words present in the modern world. Not only for people working in the financial field, they are phrases included in almost everybody`s life, at least in the United States. With those words, topics such as credit inquiries come to the vocabulary of people looking for or planning to ask for a credit in the near future. In this context, whether or not to dispute credit inquiries and how to do it becomes a pertinent issue for many individuals.
When you are applying for a loan, mortgage, or credit card, the creditor will search your credit report. If your score is not favorable, you will either be rejected or charged a high-interest rate. You do not want that, so you’re likely willing to improve your credit report.
1. Understanding why inquiry removal benefits your credit score
If you are thinking about how to dispute credit inquiries, you should first understand why an inquiry removal could improve your credit report. A credit score is a measure built from the following elements:
35% Payment history. Here is where your past is still visible. How well you have paid previous loans is the factor affecting your score the most. Every time you failed in paying a loan on time a negative element was taken into account.
30% Debt ratio. How much debt you currently have is relevant because this limits your capacity to pay for additional debt. The lower the debt ratio, the higher the score.
15% Length of credit history. If your credit history is too short, the information about your credit history is not very relevant. The longer the history, the better the score. That is why many people try to start building a positive credit history early in life before real needs arise.
10% Credit type. This refers to the kind of credit held by the person. There are some credits that are stricter than others.
10% Inquiries. Although the relative weight of inquiries is small within the total score, this category could make a difference between a rejection and an approval in some cases. The larger the number of inquiries, the lower the score.
The inquiries are included in the calculation and also listed at the end of your report, usually in a section titled “credit inquiries.” As you can see, if you succeed in the task of disputing credit inquiries and remove them from your credit report, your score could improve.
But should you worry about how to dispute all credit inquiries you have? Keep reading.
2. Understanding when to dispute credit inquiries
Not all inquiries affect your credit score. There are hard inquiries and soft inquiries. The hard inquiries are caused by your applications to credit lines or loans, but only those created over the past two years appear in your report. Do you remember when you required a mortgage, a store credit card, or a personal loan? Well, every time you applied for those during the last 24 months, the creditor asked to check your credit report and a new hard inquiry was created. Hard inquiry means that you know about them and know why they are appearing.
The soft inquiries do not affect your score. However, they are shown. They are created when some person or institution checks your credit report without your authorization or an action done by you. This could occur, for example, when a bank wants to give a credit card you did not ask for. When you review your own credit score a soft inquiry is created too.
A hard inquiry is usually not disputed. But if you really know that you did not make an action to trigger it, you should dispute it. Is there an inquiry caused by a bank that you never contacted? Is there a name or a date that you do not recognize? These are opportunities to dispute credit inquiries.
Before going to dispute credit inquiries, be sure which issue is really affecting your creditworthiness. If you have an excellent payment history and very low debt ratio, it is probable that one or few inquiries are not hurting you. In contrast, if your past payment history is too poor and you are currently managing too much debt, you perhaps have to solve other problems first. In any case, it is always useful to ask for expert advice to know about inquiry removal processes.
3. How to dispute credit inquiries
The first step to dispute credit inquiries is to have a copy of your credit report. Check every inquiry and try to identify if there is something that you do not recognize. As mentioned above, there are actions that could be done without your authorization, and therefore you might require inquiry removal.
On the other hand, you should be cautious about possible identity theft. This is not usual, but make efforts to verify if everything appearing in your report corresponds to your activities during the past two years.
Once you have a list of inquiries that can be eliminated, you have to proceed with the inquiry removal process. At that point, you have to know how to dispute credit inquiries. You can do it on your own or contract the service of an expert company.
A certified letter is sent to every creditor explaining your case. You have to be patient because maybe there will be other exchanges of emails and letters with that creditor. Both sides have to be sure about why the credit inquiry removal should be done.
Inquiry removal can be a successful action to improve your credit report and make you eligible for that loan you really need. But we suggest you contact someone with experience in credit repair before starting to dispute credit inquiries. Experts will handle the procedures faster than you and with higher effectiveness.
This article was written for Grand Teton Professionals for InquiryBusters. If you need funds but your credit score is not favorable, contact us to remove credit inquiries and get funds fast. Please contact us at support@inquirybusters.com. For Media Relations, please contact Misty.Burrell@GrandTetonProfessionals.com