It's your credit report, so make sure it correctly reflects your money management skills.
Any time a lender or creditor requests a copy of your credit file from one of the big three credit bureaus -- Equifax, TransUnion, or Experian -- that single inquiry is referred to as a "hard pull." While a single hard inquiry is unlikely to prevent you from taking out a loan or opening a credit card, it does ding your score a bit.
If you have too many hard inquiries on your credit report, a potential lender may grow concerned that you're haphazardly trying to take out new lines of credit. In short, it makes them nervous about your ability to repay your obligation to them.
When you can have a hard inquiry removed
You have a legal right to request that a credit bureau remove hard inquiries from your report only when one of the following conditions applies:
- You did not apply for credit through the company that pulled your report.
- You did not authorize the company to pull a credit report.
If you did not apply for credit or did not authorize a company to pull your credit report, dispute the hard inquiry through the credit bureau in question. You can dispute any errors you find directly through the bureau's website or by mailing them a dispute letter.
Feel free to follow the steps laid out for disputing credit report mistakes.
When you cannot have a hard inquiry removed
Let's say you applied for an auto loan. As you applied for the loan, you gave the creditor written permission to pull a copy of your credit report. If you give a creditor the right to check your credit, you cannot remove the hard inquiry from your report, even if your loan application was denied.
When you give a lender permission to check your credit, you do so knowing that your credit report will reflect that fact.
The good news is that hard inquiries only remain on your credit report for two years and typically only affect your credit score for one year.
The importance of monitoring your credit reports
People are sometimes surprised to learn that their Equifax, TransUnion, and Experian credit reports look very different. For example, one may show that you've paid your auto loan off in full, while another may indicate that you still owe money. They can't both be right.
There's nothing fun about going through a credit report with a fine-tooth comb looking for mistakes, but it's important if you want to maintain a high credit score.
Your rights
Federal law allows you to do two things:
- Receive a free copy of your credit report. These are being made available weekly through 2023. It's easy to order your credit report from each of the three major credit bureaus through a site like AnnualCreditReport.com.
- Dispute any inaccurate information on your credit reports. If you find a mistake and dispute it, the credit bureau has 30 to 45 days from the day you file the dispute to investigate your claim. Once it's investigated, they have five days to notify you of their findings. If they are unable to verify the point you disputed, it must be removed from your credit report.
Mistakes add up
Your credit report paints a picture for potential lenders, letting them know how you've managed your finances in the past. Any mistakes you find, no matter how minor, can add up to an inaccurate picture of your credit history. Removing even the smallest mistakes is a quick way to boost your credit score.
To be clear, having too many hard inquiries on your credit does matter. However, if you make your payments on time each month and carry less debt than you're eligible for, your overall credit score will be on the right track.
