(DailyDig.com) – Should you try to avoid having credit checks done on your credit report? The answer isn’t cut and dry and varies depending on individual situation. Credit inquiries can definitely lower your credit score, causing people to attempt to reduce their number they receive. Removing credit checks from your name is not always possible, but you can take steps to minimize the impact they have on your credit score. Keep reading to learn more about the different types of credit checks and how you can reduce damage to your credit score.
Hard vs Soft Credit Inquiries
Firstly, it is essential to understand that there are two types of credit checks. These are often called “hard” or “soft” checks.
Hard Inquiries
Hard credit checks are typically done to approve an applicant for a loan or credit card.
A hard credit check cannot be done without permission, and you will usually know when it is coming.
Hard inquiries do affect your credit score.
Soft Inquiries
Soft checks can be done for the following reasons:
- Background checks for employment
- Credit card companies’ pre-approved offers
- Allow someone to check their credit.
Soft credit checks do not affect a user’s credit score. In fact, credit card companies do a soft check every time they offer one of their pre-approved credit cards in the mail. These kinds of things can happen without your permission.
How To Reduce or Avoid Hard Inquiries?
Hard credit checks typically are only an issue when you have too many of them within a short period. This makes applicants look like a poor credit risk, making them appear in poor financial condition.
So, what are the ways to avoid these credit hits? Here are some tips:
- Check your credit report regularly (this will not affect your score) to quickly identify fraudulent inquiries.
- Don’t take credit lightly. Most people don’t need more than one or two lines of credit. Don’t apply for store credit cards just for a loyalty discount.
- If you are applying for a mortgage or loan, try to group your requests within a short time frame. For example, FICO considers similar inquiries in 45 days as one check. From this, it is clear that you are shopping for rates or something similar, not trying to get large lines of credit at once. Therefore, if you seek parallel approval from six or more other creditors, only one check will be counted. The best thing to do is to make all your mortgage checks as soon as possible. Note that this does not apply to credit cards.
Remember that hard inquiries do not have much impact on you. However, it is best if they are still mostly avoided. This and practicing other good credit habits, such as paying everything on time, can significantly lower your risk of dinging your credit score.
Can Somebody Use Credit Repair to Remove Inquiries From Their Score?
The short answer is no. Credit repair cannot eliminate the impact of complex problems on a consumer’s credit score.
However, hard credit checks must be used carefully to detect deception. When authorization is required for complex investigations, the person appearing on the report is credible without significant fraud or identity theft.
Fortunately, hard checks only cause a slight drop in the user’s score, which disappears after a year.
Hard credit checks cannot be removed from your report, but they have a negligible effect, which can still be further reduced by gathering them together. Even better, they are automatically removed, usually after a year. Although it is better to minimize them, don’t worry too much about them, and don’t let them stop you from shopping around when applying for loans.
Copyright 2022, DailyDig.com
