How Do Your Credit Inquiries Affect Your Loan?

Each time you apply for a loan from a lending institution, an investigation is recorded in your credit report. This is called the hard pull investigation. A soft withdrawal investigation occurs if your credit report is filed by a non-creditor. Soft pull questions do not affect your credit points; these are: potential employers, non-lenders or yourself. Whenever a credit report is issued by a lender, at least 3 to 5 points may have a negative impact on your points. Credit queries are listed at the end of a credit report and remain in your report for 2 years.

How Do Borrowers Interpret Credit Requests?

When the lender reviews a credit report and sees numerous final questions, it is an indication that a borrower has applied for a loan and has been rejected by other lenders. This is an indication of potential financial problems or increased lender risk. A few recent inquiries are a red flag to potential lenders, as they are a sign that unreported loans and revolving accounts have been opened but not yet reported to credit bureaus. However, the type of lender that withdraws your credit will affect how your points are affected. Mortgage, auto and student loan questions will not affect your score for 30 days. In addition, requests for mortgages, auto loans or student loans within a 45-day period will only be counted as an investigation. The rationale for these two exceptions is to ensure that the consumer achieves the best interest rate with multiple lenders without penalties. Remember, these rules only apply to mortgage, auto and student loan claims. Credit cards, store cards, petrol cards and personal credit queries are immediately counted against your points.

How Do You Protect Yourself From Credit Inquiry Abuse?

Request a free copy of your credit report from 3 major lenders (TransUnion, Experian and Equifax). Credit reports can be requested online from any of the credit institutions mentioned above or at You are legally entitled to receive an annual free credit report from each credit institution.

Review credit reports thoroughly for any errors or questions that you do not approve. Automotive dealers are very famous for submitting your loan application to multiple lenders for an auto loan. You can see 10 to 15 questions after applying for a car loan through a dealership. Although there is no fixed point value per query, you may find that these query amounts significantly lower your scores depending on the length of your credit history. You can ask the credit bureau to correct any errors or object to unauthorized questions. If the creditor requesting unauthorized credit cannot provide proof that you are authorized to withdraw your credit, it should be removed from your report.

Credit questions make up 10% of your credit points. Therefore, it is imperative that you review your credit, making sure that the questions listed in your report are approved by you. Any lender that withdraws your loan without your permission is in violation of federal law.

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