Question:   What counts as a credit report inquiry on my credit report and how can I minimize inquiries?

Answer:      Any time you apply to obtain a credit card, home mortgage, student or auto loan, the lender will view your credit report. This is called an “inquiry”.

When applying for credit you are required to authorize potential lenders access to view your past credit and debt performance.

They use the credit history information and credit score rating to decide whether or not you are a qualified applicant. Your credit report helps the lender assess their risk of making you a loan.

Every credit report inquiry is listed on your credit report. Any time an inquiry is made, the lender not only looks at your current and past debts, they also check to see if you’ve ever had a chargef off account or filed for bankruptcy.

Lenders also consider the number of accounts you have open and the number closed. They check to see how many times you’ve recently applied for credit by looking at the recent inquiry activity.

Too many inquiries can reduce your credit score numbers and lead a potential creditor to turn down your application. Understandably, if there are a great number of recent inquiries over a short period of time, it will make lenders wary.

The lender might view this activity as coming from a person who is irresponsible, desperate for money, undisciplined, in over their head, etc – overall a higher risk applicant.

Once a potential creditor assesses your credit history report they will decide whether or not to approve your application. If it is determined that you are a high risk borrower, you will either be denied or offered credit at a very high rate in order to offset the higher risk.

From time to time, no less than once per year, every responsible consumer should review their credit report. You should check for any errors or irregularities. Always have a general idea of what's on your credit report and what a potential lender will see.

If you have a solid idea on how many loans and credit cards you have applied for over the past year, your credit report inquiry should reflect the same data.

You should know that many companies buy mailing lists from the credit bureaus. While they do not reveal your personal credit information, you may receive special credit card offers or other mailers if they view you (based on whatever criteria they set) as someone who is a good risk for credit.

When your name falls onto one of these marketing lists, these are known as “soft hits” to your credit report. Because these inquiries were not requested specifically by you or someone you authorized, these inquiries do not count as part of your credit score rating.

The best way to effectively minimize the number of inquiries is to minimize the number of applications for credit that you submit. A credit report inquiry will only occur when you specifically request credit from a lender.

The ultimate solution, of course, is to avoid borrowing money altogether.

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