How Can I Fix Having Too Many Inquiries On My Credit History?
You’ve taken a look at your credit report and you’re not happy with what you see. You’re trying to boost your score, and fast. As a result, you’ve applied for multiple lines of credit and checked your credit score a few too many times. You’re not being approved and you’re not sure why.
Well, for starters, you should know that too many credit inquiries on your credit report will start to have a negative impact on your score if you keep it up. If you’re suffering from perpetual bad credit (despite your best efforts), there may be a deeper reason that your credit score isn’t improving as fast as you would like and multiple credit inquiries aren’t helping your cause. Let’s take a look at what types of things could be affecting your credit and how to counteract both common credit issues as well as negative inquiries to your score.
How Do Credit Inquiries Affect My Credit Score?
Credit inquiries actually don’t individually affect your credit score that much. According to FICO, a single inquiry only affects your score by less than five points. As such, if you’re stressing about a single credit application or inquiry into your credit score, don’t. It shouldn’t have any lasting effects on your score. However, if you’ve made multiple applications or inquired many times about your score, that number will go up. Especially in the case where your credit history is quite bare, you might see a larger impact. If your credit history is short and you don’t have much credit to speak of, it could have a larger impact. Again, if it’s just a single request, I wouldn’t worry.
There are also two different types of credit checks; hard and soft inquiries. A hard inquiry is when a bank or lender checks your credit score and history in order to determine if you qualify for a loan. This is the type of inquiry that will affect your credit score. Soft inquiries include credit checks done by loan companies that want to pre-approve you for an offer that you haven’t applied for. It also includes free annual credit checks done by yourself. These will not affect your overall credit score.
This brings us to take a more detailed look into exactly why your credit score could be suffering. It might not simply be due to credit inquiries, and there could be other issues at play. Let’s get to know some other issues that could lower your credit score.
Why Isn’t My Credit Score Improving?
Making Payments on Time & Lowering Your Credit Utilization
Before applying for any new lines of credit, it’s always a good idea to step back and examine your financial habits. Making your loan payments on time is a huge part of your credit score. This means, if you’re paying on time for a while and then you miss a few months, those missed payments are still going to be considered on your credit report. The best thing you can do for your credit score is to work on consistency. Work on a reasonable budget and make your payments on time.
The second largest aspect of credit scoring is credit utilization, so if you work on making payments on time, you’re also working on the second issue as well. Credit utilization is a measure of how much credit you’re using in total as compared to what your maximum limit is. If your limit is $1000 and you’re using $995, your credit utilization is high. Your score will benefit greatly from paying off some of that debt.
Credit Report Mistakes
The next area that could be weighing down your credit is that you have mistakes on your report that you’re unaware of. In some cases, certain negative items may errantly show up on your history multiple times. Another example of that would be issues appearing as unresolved, even though they have been taken care of. This could happen if you’re working with a few companies to resolve a debt, such as a bank and a debt collector.
Fraudulent Account Inquiries & Credit Applications
Lastly, if you’re making payments on time, lowering your credit utilization, and you’ve cleared up any mistakes and your score is still looking pretty sad, there could be a possibility of fraud on your account. If your personal information (like social security number) has been stolen, scammers may be opening new accounts in your name without your knowledge. These accounts are neglected, often over-utilized and never paid off, which has a terrible impact on your credit score. However, you will be able to see all open accounts on your detailed credit history report. If you’re checking for mistakes every year, which you should be, you most likely already saw some lines of credit that you don’t recognize.
What Can I Do to Make Sure My Credit Score is Improving?
As we explained, improving your credit score and counteracting simple mistakes is quite straightforward. You’ll have to find a budgeting plan that works for you in order to make all of your loan payments on time and lower your overall credit utilization. This is the answer if you, yourself have been making the many hard inquiries for your own report. Luckily, you now know that this is an easily remediable situation. Now that we understand that concept, let’s move on to some other things that might be hurting your credit even worse than a few missed payments.
It’s not always as easy as “make your payments on time” and “lower your credit utilization.” Some of us are drowning in debt and just don’t see any possible way out. Don’t worry, you’re not alone. However, in order to expect improvements from your credit score, you’ll still have to do something about your total debt. That is where debt consolidation comes in. Check with your bank or the other lenders that you’re working with to see if debt consolidation is an option for you. This would mean combining all of your debt into one large loan. Some plans will offer you one large loan to pay off all of your debts, then you make payments on that single loan. In other cases, you may just be able to work all of your loans together and pay on that. Either way, This is often much easier to keep track of and may make your total monthly payment a bit lower, depending on the situation.
Professional Credit Repair Services
Another instance includes the mistakes and fraud we mentioned earlier. It’s possible that the multiple credit inquiries that are hurting your report are actually due to double reporting or fraudulent accounts being opened in your name. If you’re seeing many inquiries that you don’t recall making and/or accounts that you don’t recognize, it might be a good time to think about working with a credit repair agency. Credit repair professionals specialize in fixing these types of mistakes. They have years of experience finding evidence of mistakes and fraudulent behavior. They will coordinate with you, the bank, other lenders, and the credit scoring agencies to clear up the issues.
Credit repair can be a lengthy process, which is why credit repair agencies can be so helpful, especially in circumstances involving fraud. A credit history involving fraudulent checks to your credit and fake accounts being opened in your name can equate to a daunting credit history. It takes time to sort through all of the details and it may take a professional to know which accounts and credit inquiries are real.
When Should I Check My Credit Score?
You should always check your credit score and history once per year. The three credit bureaus allow one free credit check per bureau annually. Another credit check shouldn’t be necessary unless you’re dealing with a larger issue. If you’re trying to get approved for a new loan or line of credit and you’re not sure that your credit score is where it needs to be, you might feel like you have to check it. However, it’s a good idea to put off checking it regularly if at all possible. If you’re employing the tactics we talked about earlier, you should be on the right track, it might just take some time. Patience is key.
Checking your credit score annually is particularly pertinent to those who have any suspicion that fraudulent credit inquiries or credit applications could be on your credit history. Even if your personal information wasn’t hacked by scammers, you may have friends or family with access to your confidential details. If you have any inkling that someone other than yourself has opened an account in your name or have inquired about your credit score, it’s always a good idea to check your yearly report to confirm or deny.
If you happen to find fraudulent behavior on your history and are working with a credit repair agency to clear it up, the credit bureaus will work with you to get you an updated credit report. If an inconsistency is spotted and brought to the attention of the bureaus to resolve it, they will issue you a new, free credit report once the mistake has been full resolved. There is no need to manually check your credit score again after an error has been removed.
When Should I Apply for a New Line of Credit?
When you’re trying to get approved for a new line of credit, the bank or lender will check your credit for you, there is no need for you to check it first. This will only result in too many credit inquiries on your account. You should already have a clear idea about what is on your history before you decide that your score is in a good enough spot to open a new line of credit.
Again, patience and determination are what you need in order to be approved for a new loan or line of credit. Stable financial habits, checking your report for mistakes, debt consolidation, and partnering with a credit repair agency to resolve fraud could all play a part in perfecting your credit score for good. There is no credit mistake that can’t be resolved, including too many credit inquiries on your credit report. Even the nastiest items on your history will drop off after seven to ten years. In the meantime, if you can get all of the above in order while you wait, you can get yourself setup for a credit score that you can be proud of.
For tips and guides for improving your credit score, and how to read your credit report, visit our credit score resource and learning center.
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Trisha is a writer and blogger from Boise, ID. She is a dedicated vegan, an avid gamer, cat lover, and amateur SFX artist.
This post was updated December 18, 2017. It was originally published August 22, 2017.