Inquiries

The final section is the inquiries. That’s a list of everyone who asked to see your credit report. Any time anyone gets into the report, it’ll post an inquiry.  That means if you try to apply for a credit card, it’s listed as an inquiry.  Have you been shopping for a car?  Every time a dealership runs a credit report, it shows.  If you call the credit bureau and ask for a copy, it will be on there. It’s a very detailed entry record. Generally, this is great for the consumer.

Inquiries are divided into two sections. “Hard” inquiries are ones you initiate by filling out a credit application or taking your child to the orthodontist. “Soft” inquiries are from companies that want to send out promotional information to a pre-qualified group or current creditors who are monitoring your account.

You may have heard that a large number of inquiries can have a negative impact on your credit score, but you’re probably OK. The vast majority of inquiries are ignored by the FICO scoring models.  They’re not the steak in the steak dinner, so to speak.

For instance, the model has a buffer period that ignores inquiries within 30 days of getting a mortgage or a car loan. It also counts two or more “hard” inquiries in the same 14-day period as just one inquiry.  You could have 30 in two weeks and it only counts as one.

However, on the other hand, having a lot of credit inquiries on your account could also show potential creditors that you are trying to live your life on credit which means you might not have the means to pay back the debt.  This is especially true if you’ve been applying for a lot of credit cards.  And there are always many opportunities to apply for a credit card.

Of course, you know about all of the offers that come in the mail.  They usually read “You’ve Been Approved!” as an enticement for filling out the application.  This is not always true with pre-approval offers, so proceed carefully.  I usually shred them up and forget them.

Another time that you will be asked to apply for credit occurs in public places and the companies are offering products for free in exchange for a credit application.  I was at a baseball game recently and one credit card company was offering free team T-shirts and all I had to do was fill out their credit card application.  I didn’t do it, but what an enticement – especially for a fan!

Watch out, too, when you are shopping at your favorite department stores.  They also have store credit cards and may offer you a percentage off your purchase in exchange for a credit application.  In general, this is not a bad idea – which we will talk about a little later in rebuilding your credit – because store credit cards are great when helping rebuilding your credit.

The bottom line is that if you don’t need another credit card, don’t apply for one.  It’s always good to have one on hand for emergencies, but having five or six can just be a temptation to spend beyond your means.

There may also be a section on your credit report that lists creditor information.  The creditor contact section lists the name and contact information for each creditor that appears on your credit report. This can also include the contact information for creditors that have made inquiries.

Each creditor’s address is listed to the right of the creditor’s name. When available, a phone number is listed for the creditor. Creditors without listed numbers should be contacted by mail.

So that’s the first step – getting your credit report and going over it with a fine tooth comb.  But where’s that magic number – your credit score?  Let’s begin with a short section on the credit score itself and where it comes from.

Filed under: How To Read Credit Reports