All of us have certain things we don't want others to see.
For me, it's my eighth grade yearbook picture...the video
of my karaoke debut...all the junk under my bed...and the
personal information in my credit report.
While we can keep most of our private stuff private, your
credit report is the one thing some outside parties have
permission to access.
When someone requests a copy of your credit report, it's
called a credit inquiry. But exactly who can look at your
credit report? And, how do these inquiries affect your
credit score?
Here's looking at you, kid To keep any Joe Schmo from
getting their hands on your report, the Federal Fair Credit
Reporting Act (FCRA) restricts access to your credit
information. Generally, only businesses and parties with
"permissible purpose" can view your credit report. Examples
of permissible purpose include accessing a credit report
for a credit application, the underwriting of insurance, in
connection with determining eligibility for a license or
government benefit, or for a business transaction initiated
by a consumer.
In other words, anyone with a legitimate business need can
gain access to your credit history. This includes
creditors, lenders, insurers, and landlords who need to
review your credit as a part of an application process.
Employers and potential employers can also request your
report, but only with your permission. Anyone who obtains a
copy of your report under false pretenses can be fined
substantially and jailed for up to two years.
Of course, you have every right to know who is looking at
your credit report. There's a section on your credit report
that lists everyone who accessed your report in the last
two years.
Once you know who is looking at your report, you may start
wondering how these inquiries affect your credit score.
Hard vs. soft inquires: what's the difference? There are
two types of inquiries: hard and soft. When you apply for a
mortgage, car loan or other credit, a lender is authorized
to request your credit report. This is a hard inquiry, and
this type of inquiry can impact your credit score.
When businesses do a credit check to offer you pre-approved
offers of credit or insurance it is a soft inquiry, which
does not affect your score. Soft inquiries may also be
generated under other circumstances, such as when a utility
company or a company you already have an account with looks
at your report. Requesting your own report from a company
like TrueCredit is also a soft inquiry.
Let's get back to hard inquiries. These play a part in your
credit score because you initiate the inquiry. If there's a
long list of applications for credit cards on your report,
you may look credit hungry in the eyes of lenders. This
could make you a higher risk, so your credit score may drop.
The story is a little different when it comes to secured
loans. Looking for a mortgage or car loan may cause several
lenders to request your credit report, even though you're
only after one loan. Because of this, multiple auto or
mortgage inquiries in a two to three week period may count
as just one inquiry depending upon the creditor—and
could have little impact on your credit score.
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TransUnion's TrueCredit.com has helped millions of
consumers manage their own credit health. TrueCredit
provides all the information individuals need to manage
their credit. TrueCredit.com products include online credit
reports, credit and insurance scores, credit monitoring,
debt management tools and identity theft insurance, all
designed to help individuals achieve greater financial
well-being, http://www.truecredit.com/
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