When you, a potential lender, credit provider, employer, or other organization requests access to the information contained in your credit report, such as your credit score and credit history, this is known as a credit inquiry. At any time, you can personally request a copy of your own credit report, in order to monitor your credit history and deal with any financial problems you’ve been having. You’re allowed one free copy of your report per year and will be charged a fee for any other copies you request. If an organization is requesting a copy of your credit report, it’s because they’re trying paint a better picture of who you are, and determine whether or not you’re a high-risk borrower.
Read this article to find out if Credit Monitoring is right for you.
Who Can Request Access to My Credit Report?
There are specific federal and state laws that are put in place in order to determine who is allowed to access your credit report, meaning that only you or any companies that you’re involved with can view your information. When they want to obtain permission to pull your credit, a company must be:
- In the process of having you approved for credit or a loan (i.e. banks, credit card companies, lenders)
- Trying to collect a debt from you (i.e. banks, lenders, creditors)
- An employer considering hiring you for a position at their company
- A landlord or building manager considering approving you to rent an apartment or house
- An insurance provider
Inquiries Related To Credit
An inquiry that’s related to credit will usually be carried out by a company or organization that’s considering providing you for new credit or loan. These kinds of credit inquiries are known as “hard inquiries” or “hard pulls.” Note: every time a hard inquiry is made on your credit report, your credit score will drop slightly. If you’ve had a large number of hard inquiries on your report, all within a short timeframe, you could see your credit score impacted in a negative way. In the United States, once an inquiry related to your credit is made, it will show up on your credit report and remain there for a period of 2 years, depending on which credit bureau you’ve chosen. However, it will only affect your credit score for up to 12 months.
Inquiries Unrelated to Credit
An inquiry that is NOT related to credit is typically done by yourself when requesting a copy of your credit report. It can also be done by other companies that are considering entering into an agreement with you that does not pertain to credit, such as:
- Companies or organizations that require a verification of your identity
- Potential employers
- Potential landlords or renters
- Insurance providers
- For the purposes of fraud detection
These non-credit related inquiries are known as “soft inquiry” or a “soft pull.” In this case, your credit score will not be impacted, positively or negatively. In most cases, you will have to give permission to whatever company, organization, or individual that needs to perform one of these soft inquiries, unless it’s been lawfully sanctioned.
The Account Review Inquiry
When a company or other organization performs an inquiry and has a pre-existing relationship with you, this is known as an “account review inquiry.” This type of inquiry is performed so that a company has an easier time:
- Renewing accounts
- Changing pre-existing limits
- Pre-approving clients for other services
These types of inquiries will not harm your credit score, and in future will only show up on your credit report for you to see. Account review inquiries will not be visible to any other company or organization if they request a copy of your credit report.
For more information about Credit Reporting Agencies, check out our other article.
Checking Your Credit Report
In the United States, all citizens with a credit report are entitled to one free copy every 12 months. So, it’s always a good idea to use this opportunity and review your credit report at least once a year. It’s a good way to keep an eye on all your credit accounts and be sure there aren’t any problems or mistakes. For any other times during the year that you choose to pull your credit report, you will be charged a small fee. However, checking your report more than once a year is always a smart move. In fact, if you’re interested in making any significant changes to your finances, or if you’re presently having any financial issues, it’s a good idea to review your credit report once every six months.