Credit Inquiries: Guess who´s Looking at your Credit Report

by Lucy Lazarony for Credit.com

Your credit record is being watched.

All kinds of companies sneak peaks at your credit report for all kinds of reasons. And while your credit file isn´t as popular as a YouTube video, it does get plenty of action.

Companies sizing up your credit file include banks, credit card companies, cell phone companies, utility companies, as well as potential employers and landlords.

Want to know who´s looking at your credit report? It´s easy. All you have to do is order a copy of your credit report and take a look.

Your credit report contains a record of all the companies that have accessed your credit report in the past two years. Look for the section called “credit inquiries” and you´ll be able to see all the different companies that have looked at your credit.

Don´t be surprised if there are plenty of company names that you don´t recognize. These are companies that want your business, and they check your credit before sending you a promotional offer in the mail. It can make for some pretty interesting reading, but it´s nothing to worry about. Credit inquiries from businesses seeking your business won´t impact your credit score in any way.

Neither will credit inquiries from companies that you already do business with, such as banks and credit card companies. Credit card companies in particular like to keep a close watch on their customers´ credit files. But these kinds of peaks at your credit report won´t affect your credit score.

The inquiries that will impact your credit score are the ones you initiate when you apply for a mortgage, car loan, credit card, or other form of credit. When you fill out an application for credit, you give the lender permission to pull a copy of your credit report. And these inquiries will be factored into your credit score.

In most credit scoring models, inquiries fall under the category of “new credit.” In the Fair Isaac FICO formula, the new credit category accounts for 10 percent of a person´s credit score.

The impact of credit inquiries on a person´s credit score depends on the overall content of your credit record. For many folks with well-established credit records, applying for a single application for credit and the resulting credit inquiry won´t significantly impact their credit score. For others, credit inquiries can knock a few points off your score.

Inquiries are likely to have a greater impact on your credit score if you have a short credit history or you have few credit accounts.

Shopping around for a car loan or mortgage may result in several different lenders pulling copies of your credit report. But these inquiries won´t necessarily all hurt your credit. Most credit scores group together auto or mortgage inquiries made within a 30 days period. So it´s possible to shop around for a good deal on a loan without doing serious damage to your credit score.

Curious about the different types of companies nosing around your credit file? Here´s a quick roundup explaining why they look and the impact they have, if any, on your credit score and your wallet.

Landlords. Landlords and rental agencies often pull a copy of your credit report as a part of the review process. They figure that if you´re responsible with your credit then you´ll be responsible in their apartment and in making your rent payments. They may check to see that the employer listed in a credit report matches the employer that you listed on your rental application. They also are looking for any major negative records. If you´ve got credit problems, you could be turned down as tenant, be asked to make a higher deposit, or be asked to pay a higher rent. When a landlord views your credit report, it will not have a negative impact on your credit score.

Utility companies. With your permission, electricity, cable, and other utility companies may check your credit report when determining your rates. If you´ve got credit problems, you may have to put down a deposit, add a co-signer or pay higher rates for your utilities. When a utility company views your credit report, it does not harm your credit score.

Cell phone companies. Cell phone companies check your credit score before granting you a service contract. If you´ve got banged-up credit, you may have to pay extra for a service plan or put down a big down payment. When you apply for a new cell phone contract, the inquiry will impact your credit score. And some cell phone contracts allow the company to review customer credit. If so, your cell phone company could be eyeing your credit at any time. But these follow-up credit checks won´t impact your credit score in any way.

Credit card companies. Like some cell phone companies, credit card companies like to check up on their customers´ credit files. All this snooping around by your credit card company won´t hurt your credit score but it could hurt your wallet. If a card company sees something it doesn´t like on your credit report, it could raise your interest rate. Card companies also check the credit reports of potential customers, but these inquiries won´t hurt your credit.

When you apply for a new credit card, you give the card issuer permission to pull a copy of your credit report. And these inquiries will be factored into your credit score. So go easy on your applications for new cards. Several credit card applications in a short period of time could harm your credit score.

Employers. With your permission, potential employers may review your credit report when you apply for a job. Employers want to see that you are responsible about handling your financial obligations. They also are looking for any major negative records and any discrepancies. Your current employer may check your credit report as long as he discloses to you that he may take such an action. When an employer checks your credit report, it does not have a negative impact on your credit score.

If you want to read more about inquiries and their impact on your score, check out this article from former FICO insider John Ulzheimer.

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