How Requests About Your Credit Report Can Hurt Your Score

Are there any way to have hard inquiries removed from my credit report, A. We're glad to see you're paying attention to your credit reports. You want to make sure they're accurate because of the direct effect they have on credit scores, the ability to obtain credit and in some cases, the interest rates that come with it.

There are two types of inquiries, said Claudia Mott, a certified financial planner with Epona Financial Solutions in Basking Ridge. She said a soft inquiry doesn't have a direct effect on a credit score, while a hard inquiry may cause a score to drop by a few points. The inquiry will typically remain on your credit report for a little as 12 months but no more than two years, she said.

While a hard inquiry may cause a score to drop by five points or less, it is not the most important piece of the actual calculation of your number, she said. A similar letter should also go to each of the three credit bureaus -- Experian, Equifax and TransUnion -- indicating that you are disputing the inquiry. Mott said you should be sure to include a copy of the page from your credit report showing the inquiry in question, and send the letters by certified mail so that you have proof of receipt. You are entitled to receive a free report from each of the three agencies once a year. Email your questions to Ask@NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Sign up for NJMoneyHelp.com's weekly e-newsletter.

Since the reports differ, the credit reports also vary. Lenders use the “representative” score to make decisions. When they pull three bureaus, lenders use the middle score to qualify borrowers. If the scores are 714, 690 and 731 the 714 score will apply. If they only pull two bureaus, the lower score is the “representative” credit score. The Federal Housing Finance Agency (FHFA) says all mortgages sold as of this writing to Fannie Mae and Freddie must include a FICO-brand credit score. FICO was developed by credit score pioneer Fair Isaac Corp.

Lenders generally - but not always - want loans which qualify for resale to Fannie Mae and Freddie Mac. For that reason, FICO scores dominate the mortgage credit field. There is, in addition, the Vantage system developed by the three leading credit report agencies, Equifax, Experian and TransUnion. Vantage wants its credit scores accepted by Fannie Mae and Freddie Mac.

There is now a battle over credit score turf and territory. You can get free credit scores online. For example, Discover offers free FICO scores, noting that “you don’t have to be our customer and there’s no ding to your credit.” CreditKarma offers free Vantage credit scores from Equifax and TransUnion. The scores you find online are considered “educational” and are not the scores most mortgage lenders use.

In fact, there are over 40 different FICO scores used in different industries. Still - and you can trust this - free credit scores can give a good sense of your credit standing. They’re a good way to monitor credit usage and alert you if anything suddenly changes. Peter G. Miller, author of The Common Sense Mortgage, is a real estate writer syndicated in more than 50 newspapers nationwide. Peter has been featured on Oprah, the Today Show, Money Magazine, CNN and more. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

If you keep a regular eye on your credit report, you’ll notice when identity thieves open accounts in your name and when errors are listed that might cause you problems in the future. Here’s how to do it for free. US law entitles you to a free yearly credit report directly from each agency, but you’ll have to go elsewhere if you want to get your credit report more frequently.

Don’t worry—it’s still free. There are multiple credit reporting agencies. The “big three” in the USA are Equifax, TransUnion, and Experian. When you apply for credit—such as a credit card, loan, or mortgage—the lender pulls a copy of your credit report from one or more of these agencies. It’s up to the lender which agency they use.

These credit reports usually have the same accounts reported on them. For example, if you have two credit cards and an auto loan, you should see those three accounts appear on all of the three reports. However, if you apply for a mortgage, you’ll only see the bank’s inquiry (or “pull”) appear on whichever credit report they looked at.

While the reports should usually show the same information, it’s a good idea to check all three to ensure the information is correct. Note that, while these services will show you a “credit score,” those credit scores are actually a pretty complicated topic. The credit reporting agency just reports raw data—like a list of your accounts, usage, credit limits, and payment history—and creditors can run that through a number of different models to get the numerical score they use. The free Credit Karma website shows data from both your Equifax and TransUnion reports.

They also have free apps available for iPhone and Android. Credit Report to view either your TransUnion or Equifax report. Toggle between the two at the top of the page. In the app, both reports are right at the top of the main page. If there’s a problem with something here, you can click an account to see more information about how to dispute an error.

Credit Karma lets you see updated information every seven days, so you can always see a recent copy of your credit report. They also send you alert emails when a new account appears on your report, or if they detect any change. So, if an identity thief ever steals your information and opens a new account in your name, you’ll get an early heads-up.