There are 3 types of inquiries to know about as you look over your credit report. It’s important to understand them and how they affect your credit scores because they can affect your credit scores very seriously. I have seen a couples credit scores drop over 120 points because of “shopping for credit” and not realizing their inquiries were costing them points.

The first type of inquiry is one where you initiate the loan request. You fill out an application, or go to a store and they offer to sign you up for a store credit card processing and then will give you 10% or 20% or more off of your first purchase with them. Each of these is a hard pull inquiry and if more than 2 in a year will start to cost you points. There are many ways you might have a hard pull inquiry and not realize you are getting one. You might go into a auto dealership and ask about the financing of a car. Be sure that if they ask for your social security number, that they are going to pull your credit even if you don’t ask for them to do so… they will assume that since you gave them your social security number, that you authorized them to pull your credit. Boom, you just had a hard inquiry pull.

It’s not bad if that is what you wanted, but what if you go and look at autos from several dealerships and each pulls your credit? You just got hit with a hard inquiry from each dealership and your scores will be dropping as you go along.

There is an exception, as there always is… On the inquiry there is a place to put the type of inquiry that is being pulled. If the auto dealership, mortgage company, bank, credit union, etc, where you are applying for a loan fails to put the type of inquiry onto the inquiry pull, then this is where each credit pull will cost your credit score points. Another challenge to face is the type of scoring module they are using when pulling your credit. Because the credit bureaus have over 19 different scoring modules to choose from and the dealership, loan company or bank can choose which scoring module they will pay for, then the combination of error can be endless and very costly to you. How do you know? You don’t… you can ask but they won’t know which scoring module they are using because it is usually decided by someone at corporate headquarters and they don’t tell the sales people and don’t care anyway.

Tagged with: • • • • •

Like this post? Subscribe to my RSS feed and get loads more!