If you are not regularly monitoring your credit report, you might be surprised to learn who is making credit inquiries. Even more surprising is the decisions these people are making based on that information.
If you have filled out an application for a job, a rental property or a mobile phone, or if you need utility service, your credit report may have been reviewed as part of that application process. When you supply your name, birth date and Social Security number on any type of application, you may be unknowingly subjecting yourself to a credit report inquiry. Insurance companies use your credit history to decide the premium you will pay, landlords may check your credit to determine if you would be a good tenant, utility companies may pull your credit report to set your payment terms, and employers may decide to hire or promote you based on your credit rating. Government agencies, including state or local child support enforcement, also have the right to pull your credit report for license or benefit applications.
Your credit report contains private information and includes not only your name, but your address and previous addresses, telephone number, Social Security number, year and month of your birth, and your employment information. Your report may also include public record information, such as civil judgements, tax liens and bankruptcies. This is information that you may not want certain people to know. According to the Fair Credit Reporting Act, however, anyone with a “legitimate business need” can access your credit report. Each inquiry can drop your credit score from two to five points. While these inquiries stay on your credit report for two years, they will only affect your score for one year.
The good news is that you have a right to obtain a free copy of your credit report from each of the three reporting agencies each year, and you have the right to know who else is looking at it. When you order a copy of your report, it will include information about anyone who has inquired about your credit or has requested a report. It is a good idea to regularly monitor your report, because many credit reports contain serious errors that can jeopardize your credit rating and financial well-being.
Credit inquiries are not only carried out by financial institutions when you are applying for a credit card or rate-shopping for a loan or mortgage. Many companies are using credit reports more and more often to make any number of decisions. This is all the more reason to frequently check the accuracy of your credit reports. Otherwise, you may be denied your ideal apartment, lower insurance premiums, or even your dream job or hard-earned promotion at work.