Cash 1 Blog
How to Remove Hard Inquiries From Credit Reports
Various factors determine your credit score, such as payment history, debt levels, and credit usage duration. Improving your credit score can get easier by paying close attention to these variables. However, you should also monitor the factors that can negatively impact your credit score while trying to build credit. And one of them is "Hard Inquiries."
As you enter the credit market, you will generally find two types of credit checks or inquiries. One is soft inquiries, also called soft pulls or soft credit checks, which do not impact your credit score. There is another type of inquiry called a hard inquiry or hard pull. Your credit report records it and it can temporarily lower your credit score.
In this article, we'll focus on understanding what is considered a hard credit check, how long it stays on your credit report, and why it is essential to remove them from your credit report. So let's begin!
What is a Hard Inquiry?
A hard inquiry happens when a lender or business you want to work with checks your credit report. It may also be called a hard pull or credit check. This inquiry helps the lender see how risky you are as a borrower and how well you managed past debts.
Hard inquiries can potentially lower your credit score by a maximum of five points. Also, credit scores are not affected by every hard inquiry. For instance, when you're in the process of rate shopping for an auto loan or mortgage, multiple lenders may conduct hard inquiries to assess your creditworthiness and decide on suitable terms and interest rates.
However, suppose you apply for these loans within 14 days (sometimes a bit longer). In that case, credit scoring models treat them as a single inquiry, minimizing the impact on your credit score.
How Different Is It From a Soft Credit Check?
You may also be acquainted with soft inquiries, which do not impact your credit score. Typically, soft credit checks occur when you personally review your credit or when a lender or credit card provider sends you preapproval offers.
The table below briefly summarizes the distinction between a hard and a soft inquiry.
|When they happen
|Usually occurs when a lender evaluates whether or not to provide you with a loan.
|It occurs when someone seeks credit information about you without intending to extend a loan.
|A hard credit check could lower your scores by a few points.
|Soft checks won't affect your credit scores and may not also be recorded in your credit reports.
|Length of Impact
|You will generally see a hard inquiry stay on your credit reports for about two years.
|These inquiries are hidden from potential lenders while being on your credit report for up to two years.
Reasons Why There Are Hard Inquiries on the Credit Report
Hard inquiries result from submitting applications for loans, credit cards, or housing. While it's crucial to understand how to remove inquiries from your credit report for your financial well-being, it's equally important to know the reasons behind them. The following are the most frequent origins of hard inquiries.
- By credit card providers:
When you apply for a new credit card, it is typical for a hard inquiry to be conducted on your credit report. Financial institutions undertake this step to assess your financial responsibility and may consider your credit history when determining the credit limit you will receive.
However, an exception exists when applying for an additional credit card within the same financial institution. In such cases, they might perform only a soft inquiry if your existing account is in good standing.
Credit card issuers may also conduct hard inquiries when individuals request a balance transfer. By reviewing the applicant's credit history, the card issuer can determine if they qualify for the balance transfer offer and assess any potential risk associated with the transaction. This inquiry helps ensure that individuals with a higher risk of defaulting on their debts are not granted the option to transfer balances.
- By landlords or mortgage lenders:
Additionally, when individuals apply for housing, such as renting an apartment or applying for a mortgage, landlords or mortgage lenders often initiate hard inquiries. These inquiries evaluate the applicant's financial stability and assess their ability to make timely rental or mortgage payments. Landlords and lenders want to ensure prospective tenants or borrowers have a history of responsible financial behavior before approving them for a lease or a mortgage.
However, it's important to note that multiple inquiries within 45 days, usually when shopping for the best mortgage rate, are treated as a single inquiry by credit scoring models to minimize the impact on the credit score. Suppose you have concerns about a hard inquiry when applying for housing. In that case, it is advisable to contact the management beforehand to inquire about their credit-checking process.
- For Credit Limit Increase:
Another common cause of hard inquiries is the request for credit limit increases. When individuals want to expand their credit availability on an existing credit card or line of credit, the issuing institution may perform a hard inquiry to assess their creditworthiness. This inquiry allows the lender to evaluate whether the individual's financial situation supports a higher credit limit without increasing the risk of default. It's worth noting that while a hard inquiry may temporarily affect the credit file, responsible credit usage and timely payments can help mitigate any negative impact.
Why is It Important to Remove Hard Inquiries?
The answer is simple! There's a possibility of credit score improvement.
In addition, a high number of inquiries within a short period may make you appear riskier to lenders. Initially, hard inquiries can lower your credit score for six to twelve months. Removing these inquiries can also alleviate lenders' concerns and increase your chances of credit approval.
Hard pulls remain on your credit report for two years. After that, they are designed to disappear automatically and will no longer be visible to you or potential lenders. Items that get removed from your credit report, including aged-off inquiries, will cease to affect your credit score going forward.
However, if you come across an unfamiliar hard credit inquiry, it is crucial to have it removed. There are a few reasons for this. Firstly, it means you are penalized unfairly for an error, even if it has a minor impact. Secondly, it could indicate potential fraud, necessitating further investigation and prompt removal.
How to Remove Hard Inquiries?
Removing hard inquiries from your credit report involves a few steps. Here are quick measures to remove them:
Check Your Credit Reports
First, quickly obtain copies of your credit reports from the three major credit bureaus: Equifax, Experian, and TransUnion. It's crucial to check all three reports as they may not contain identical information. Usually, you can access your credit reports at no cost once a year through AnnualCreditReport.com.
Find Inaccurate Hard Inquiries
After obtaining your credit report, you will find a specific section labeled "Hard Inquiries." Review your credit report and identify any hard inquiries you believe are incorrect or unauthorized. Note the details of each inquiry, including the name of the lender and the date it appeared on your report. While it is essential to carefully review the entire report for accuracy, pay particular attention to the inquiry section.
It's important to remember that there might be instances where the company mentioned in the inquiry does not precisely match the one you interacted with. This can occur when a retailer collaborates with a bank to administer its credit card program.
Submit a Hard Inquiry Removal Request
You must write a letter to the credit bureaus stating the inaccurate nature of the inquiries and requesting their removal. Provide supporting documentation, such as proof of unauthorized access or incorrect information. Send the letter via certified mail with a return receipt to ensure it is received. After sending your dispute letter, monitor the progress and follow up with the credit bureaus if necessary. They must investigate your claim within a specific timeframe and inform you of the results.
If the credit bureaus do not remove the inaccurate inquiries, contact the lender directly. Provide them with evidence of incorrect or unauthorized inquiries and request that they notify each credit bureau to remove them.
While you work on removing inaccurate inquiries, focus on maintaining a positive credit history. Pay bills on time, keep credit utilization low, and avoid unnecessary credit applications.
Remember, the removal of accurate and authorized inquiries is unlikely. However, by following the steps above, you can effectively address inaccurate or unauthorized inquiries and improve the accuracy of your credit report.
How Much Does a Hard Inquiry Affect Your Credit Score?
The impact of a hard pull on your credit score can vary depending on various factors. Generally, a single hard inquiry may cause a slight decrease in your credit score, typically ranging from 2 to 5 points. However, it's important to note that the effect is usually temporary and short-lived.
Credit scoring models consider hard inquiries as an indicator of new credit applications. Multiple hard inquiries within a short period, particularly for different types of credit, may signal higher risk to lenders. That can result in a more significant impact on your credit score. Fortunately, credit scoring models are designed to account for rate shopping. When actively seeking a mortgage, auto loan, or student loan, multiple inquiries within a specific time frame (often around 14 to 45 days) are typically treated as a single inquiry. This means they have a consolidated impact on your credit score, reducing potential adverse effects.
It's worth noting that the impact of hard inquiries is just one aspect of your credit score calculation. Other factors, such as payment history, credit utilization, and the length of credit history, carry greater weight in determining your overall creditworthiness. However, for someone who is in the early stages of building their credit or has a limited number of accounts, the impact of credit inquiries may be more noticeable compared to individuals with longer credit histories.
To minimize the impact of hard credit checks on your score, it's advisable to be selective in applying for new credit and only do so when necessary. Additionally, monitoring your credit reports regularly can help you identify any unauthorized or inaccurate inquiries that you can file a dispute and have removed.
How Long Do Hard Inquiries Stay on Your Credit Report?
Hard inquiries typically stay on your credit report for a duration of two years. However, their impact on your credit score is usually limited to the first year. While they may slightly lower your score, the effect diminishes over time. It's important to note that having a few hard inquiries is generally not a cause for significant concern, but a high number of inquiries within a short period can raise red flags for lenders. Monitoring your credit and being mindful of unnecessary credit applications can help maintain a healthy credit report.
Will Removing Hard Inquiries Increase My Credit Score?
Removing hard credit checks from your credit report can potentially increase your credit score. Hard inquiries negatively impact your score, so removing them can help improve your creditworthiness. However, the extent of the score increase may vary depending on other factors influencing your credit. As mentioned earlier, the impact of inquiries on your score is relatively small compared to other credit factors like payment history and credit utilization. Removing inquiries alone may not lead to a significant score increase. Still, it can contribute positively to your overall credit profile.
In conclusion, hard inquiries on a credit report can arise from various sources, including applications for new credit, credit limit increases, housing applications, balance transfers, and identity verification processes. While hard inquiries may temporarily impact the credit score, responsible financial behavior and timely payments can help maintain a favorable credit profile. By understanding the reasons behind these inquiries, individuals can make informed decisions when applying for credit and take appropriate steps to manage their credit health effectively.
Joseph Priebe takes pride in assisting audiences with his articles to help them make sound financial decisions.
With over ten years of experience writing financial content his goal at CASH 1 has always been creating engaging and easy-to-digest information for anyone searching for immediate or long-term monetary solutions.
When Joseph is not writing about personal finance, you can find him photographing the Southwest United States with his 4x5 Graflex Crown Graphic camera. He is based in Phoenix, Arizona.