You’ve spent several years rebuilding your credit. Now that your score is well over 700, you decide to apply for an airline credit card to take advantage of the perks. Unfortunately, the creditor rejects the application.
So, you give them a call, only to discover there are too many recent inquiries on your credit report. The only problem is you haven’t applied for credit in years. There must be some sort of error!
What’s the best way to handle this situation?
Types of Credit Inquiries
Before taking action, you should familiarize yourself with the types of credit inquiries.
When you apply for credit, a hard or voluntary inquiry appears on your credit report. The decrease in your credit score is usually no more than five points. But it depends on how many new accounts you have along with the number of recent credit inquiries, notes my FICO.
You should also know that “rate shopping” isn’t detrimental to your score if done within a 45 day period. Instead, all hard pulls for this time frame count as a single inquiry. Rate shopping is applicable when exploring auto loan, mortgage or student loan options.
Soft or involuntary inquiries occur when you check your own credit. They also surface when companies screen your credit for promotional offers. This includes pre-qualification offers for personal loans, credit cards or auto loans. Soft inquiries do not affect your score.
A Step-by-Step Guide
Too many hard inquiries could send a negative message to potential creditors. So, you should get unauthorized inquiries removed sooner than later. Here’s some guidance to help you out:
Tip #1: How to Identify Unauthorized Credit Inquiries
There’s no way to know unauthorized credit inquiries are on your credit report unless you review it. So, head on over to www.annualcreditreport.com to retrieve a free copy from each of the credit bureaus.
(If you want to see your score, it’ll cost you a few bucks. Or you can access it without spending a dime with free credit monitoring services. More on that shortly).
But why should you care if you don’t have any suspicions? Well, too many unauthorized hard pulls in a short span of time could signal bigger problems. In other words, a fraudster may be exploring the playing field before he steals your identity.
And if you detect this beforehand, you’ll have a lot more to worry about than a few hard pulls.
Tip #2: Know Your Rights
Under the Fair Credit Credit Reporting Act, “you have the right to dispute incomplete or inaccurate information,”notes the Federal Trade Commission.
Once you file a formal dispute, the consumer reporting agency must investigate your claim and issue a written response within 30 days.
Tip #3: Ways to Have It Removed
To file a formal dispute, you have two options:
- Snail Mail: draft up a formal letter of dispute and send it to all three credit bureaus. Be sure to include any supporting documentation in the package. You’ll also want to send the same documentation to the creditor or information provider. That way, they’ll be aware of the dispute. For more detailed guidance on filing a formal dispute, check out 4 Steps You Should Take To Fix Errors On Your Credit Report.
- Electronically: you can submit your dispute online to avoid paper altogether. Visit Equifax, Experian or TransUnion’s website to get started. It’s in your best interest to file an online dispute with all three consumer reporting agencies. This will ensure the unauthorized inquiries are deleted across the board.
(Quick note: if the consumer reporting agency feels that your dispute is frivolous, they can toss it out).
Should You Get a Lawyer Involved?
If you don’t feel comfortable filing a dispute, you can pay a credit repair firm to do it for you. But, it may not be worth the investment.
Unless your credit score took a huge dip, you’re rectifying the issue on your own. So, consider filing an online dispute before investing in an attorney. It’ll only take a few minutes of your time, and you can save your hard earned cash.
How to Prevent Unauthorized Credit Inquiries In the Future?
The best way to prevent unauthorized credit inquiries is to stay on top of your credit profile. There are a few ways to go about this:
Credit Monitoring: this is a great way to know what’s going on in your credit profile at all times. When you enroll, you will receive instant alerts via email or text of any activity in your credit profile. This means you won’t have to wait until you’re denied for credit to find out about unauthorized inquiries. You can stop an identity thief dead in their tracks the minute they make a move. Even better, you can file a dispute right away and protect your credit rating. Plus, there are several free and paid options to choose from, so you won’t have to break the bank to stay in the loop.
Fraud Alert: do you suspect the unauthorized credit inquiries are on your profile as a result of identity theft? Contact the credit bureaus and notify them of the issue. Not only will they be removed if you can substantiate your claims, but the credit bureaus will place a fraud alert on your credit profile. A fraud alert lasts for 90 days, and prompts creditors to require additional verification if you apply for credit. Once the fraud alert has expired, you can request that it be renewed. This is definitely a deterrent to identity thieves.
Security Freeze: a security freeze will prevent access to your credit profile by prospective lenders altogether. The freeze can only be lifted if you submit a formal request to the consumer reporting agency.