When someone pulls your credit, it’s reported as either a hard or soft inquiry. Hard inquiries can trigger a temporary drop in your score, raising red flags to potential lenders. Soft credit pulls have minimal impact on your credit, and they typically don’t factor into a lender’s loan or line of credit approval decisions.
Soft credit checks are indisputable since creditors, lenders, and lenders can run them without prior approval. A hard credit check will remain on your profile for two years and could impact your score for up to a year.
If someone runs a hard inquiry without your authorization, this is considered fraud. In that case, you can file a dispute directly with the credit bureaus to remove it from your profile.
Why Should I Remove Inquiries from My Credit Report?
Hard inquiries (and their subsequent drop in your consumer credit score) don’t just hurt your chances of successfully opening a personal line of credit or a bank loan. Because you are personally liable for your business debts, consumer inquiries can also make it more difficult for you to earn business financing.
When small business owners apply for funding, their financial circumstances will be scrutinized as, or more, carefully than their business. Funding a small business is risky, so banks and other prospective lenders require assurance that you’ll repay your obligations even if your company goes out of business.
If lenders see too many inquiries on your personal credit report, they may assume that you’re desperate for cash and reject your business loan request. Therefore, you should do what you can to find and remove invalid hard inquiries from your consumer credit profile.
Discovering Unauthorized Inquiries
Everyone is entitled to one free credit report per year from each of the three consumer credit bureaus. By taking advantage of this benefit and examining your statements regularly, you’ll be better able to spot and manage errors as they occur.
If you spot a hard inquiry by a company whose name you don’t recognize, there’s a chance it’s the result of identity theft. Though, it could also be a valid inquiry. So how do you make the distinction between fraudulent and legitimate credit pulls?
First, consider whether you’ve recently:
- Given anyone your Social Security number (SSN) — A service vendor or other company may ask for your social security number without explaining clearly that they plan to run a credit check. If you provide your SSN, this could be interpreted as giving your permission.
- Sought financing with a mortgage servicer or car dealership — Occasionally, you might think you are applying for a pre-approved offer with one company, only to see multiple inquiries from other lenders on your report. This could be due to rate shopping — an effort to secure the lowest possible interest rate for your loan. All of the inquiries are considered valid, but as long as they occurred within a few weeks of each other, they only count as one pull.
- Applied for a retail store charge card — Occasionally, lenders and retail stores use third-party financial service companies to manage their charge cards. When you agree to a credit check, it may show up on your report in the name of a bank or credit card issuer rather than the retail store with whom you applied.
If you are still unsure about a specific credit pull, see if your report includes contact information for the entry. You may be able to call and seek clarification directly from the company that made the hard inquiry.
Filing a Dispute
What happens when you’ve confirmed the inquiry occurred without you granting your lender permission? Your next step is to file a dispute with the credit bureau and the company that performed the inquiry. Send your formal dispute by certified mail to each credit bureau and the lender or company that did the pull.
Your letter should include the following:
- A statement claiming you’re disputing the validity of a negative item.
- The name of the company that performed the inquiry.
- The reason for your dispute.
- A clear request to have the data removed from your report.
- A copy of your credit report highlighting the unauthorized credit inquiry.
Transunion, Experian, and Equifax also have procedures for reporting erroneous information via an online form or by phone. This action will trigger a bureau dispute-center investigation into the incorrect information on your report.
If the loan inquiries accompany a credit card or loan you didn’t apply for, you must clear up the error as soon as possible. This could be a signal of identity thieves using your SSN to borrow money in your name.
Qualify for the Revenued Business Card with No Hard Inquiries
Credit checks only impact your score for up to a year, and they will drop off your report entirely after 24 months. Though, during that time frame, they’ll erode your credit report and damage your firm’s borrowing potential.
If you’re concerned about credit checks affecting your consumer credit, the Revenued Business Card may be your ideal financing solution. Your business can qualify for our card based on sales and bank account activity, not your score or credit history. Our underwriters only perform a soft credit pull to check for Merchant Cash Advance (MCA) defaults and credit payment activity.Find out more about the Revenued Business Card by calling us today at +1 (877) 662-3489. You can also join our waitlist to learn more about this one-of-a-kind financial tool.
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