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A credit inquiry occurs when a potential credit grantor, potential employer, rental housing agency, or other entity with a “permissible purpose” (as defined by the Fair Credit Reporting Act) requests access to your credit report. These inquiries are captured by credit reporting agencies and retained in your credit report for approximately two years from the date of the initial inquiry.
Credit inquiries which may reflect negatively on your credit report are those that are triggered by you in an effort to obtain additional credit. For example, if you apply for a credit card, mortgage or car loan, an inquiry will be made into your credit history. Potential credit grantors may regard such inquiries on your behalf as an indication of financial instability. However, inquiries by a potential employer, you, or a bank interested in offering you a pre-approved credit card will not reflect negatively on your report. All inquiries are listed regardless of their nature. As a general rule, it’s a good idea to limit your number of credit-seeking inquiries. But remember, your debt to income ratio will likely be considered when a potential grantor is determining your level of risk. This means that if you have a low amount of debt in relation to your income, the number of inquiries against your account may not affect your credit rating negatively. In short, be sure to monitor the number of credit inquiries, particularly if you are hoping to assume additional loans. If you have additional questions about credit inquiries, seek the advice of a trusted financial advisor or credit counselor.
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