How Do Hard Inquiries Affect My Credit Score and What Can I Do?
Your credit score may benefit when hard inquiries fall off your credit report. Hard inquiries typically stay on for about two years and can cause a slight negative impact on your score, especially if you have multiple ones in a short period. However, once these inquiries are no longer visible, the impact on your score can diminish, potentially leading to an increase in your credit score.
Understanding Hard Inquiries and Their Impact
Yes, your credit score does increase when hard inquiries stop appearing on your credit report. This is because the number of hard inquiries you've had in the past two years is a significant factor in determining your credit score.
What Are Hard Inquiries and When Do They Occur?
A hard inquiry on your credit report is typically made with your permission. However, certain situations may be misleading. Even if you haven't applied for a loan or a credit card recently, minor changes in your lifestyle might lead to a hard inquiry. For instance:
Your internet service provider, cable company, telecommunications provider, or even your landlord might have performed a hard inquiry on your credit report without your explicit authorization. You might have signed documents without reading them carefully, unknowingly authorizing the company to conduct a hard inquiry. Upgrading your credit card or applying for an increase in your credit limit could also result in a hard inquiry. Applying for auto financing might lead to several hard inquiries, even if you only authorized one dealer.Despite these unexpected situations, many credit score models can account for minor oversights.
Reporting Errors and Fraud
It's important to monitor your credit report and be aware of any unauthorized hard inquiries. MyMoneyKarma's Intelligent Finance Tool can help you keep an eye on hard inquiries and show you the source of each one. If you find an unauthorized inquiry, it might be due to a reporting error or fraudulent activity.
Identify the lender under suspicion and search for their contact details online. Approach the lender to inquire about the reason for the hard inquiry. Contact the credit bureau to file a dispute if the inquiry was a reporting error. Notify both the credit bureau and your card issuing company if the inquiry was a case of fraud.Conclusion
In conclusion, understanding the impact of hard inquiries on your credit score can help you make informed decisions. While hard inquiries can negatively affect your credit score, their impact diminishes over time. Regular monitoring and addressing any unauthorized inquiries can help protect your financial health.