How Does a Credit Inquiry Affect Your Credit Report?

credit inquiry

How Does a Credit Inquiry Affect Your Credit Report?

When looking for a new home or apartment to rent, you will likely encounter some tenant screening. You may be asked to provide a completed application, employment verification, and references from previous landlords. Your new landlord may even want to check the tenant credit score, something also known as an inquiry on your credit report. There are two types of inquiries, and it is important to understand the differences between them, how they are used in the tenant screening process, and how and how long they can affect your credit score.

A soft inquiry is an inquiry that occurs when a person or company checks your credit report as a background check, like when a credit card company preapproves you for a loan. Soft inquiries can occur without your permission, but don’t worry – they won’t affect your credit in any way. When you pull your own credit report for your personal use, it is also considered a soft inquiry.

A hard inquiry, on the other hand, will provide your potential landlord or property manager with your credit (FICO) score and your credit history. This credit check is similar to the one a lender would complete prior to offering you a loan, and it can have a negative impact on your credit score. According to myFICO (www.myfico.com), a single inquiry usually has a minimal impact of just a few points. This could be higher, however, if you have a sparse or short credit history. After several hard inquiries on your credit report (apartments, insurance companies, utilities, new loans, etc.), those small impacts could add up. Hard inquiries appear on your credit report for two years and can impact your credit score for up to 12 months.

How can I get rid of hard inquiries I didn’t approve?
You can simply call or write the creditor and explain to them you did not authorize the inquiry and ask them to remove it. You can also dispute an inquiry directly with each of the credit bureaus.
For most apartment hunters, there is little need to be concerned about a credit check during the tenant screening process. Most inquiries will have little or no impact on your credit score, and even if they do have a small negative impact it will shrink over time and be gone within the year. Monitor your credit regularly, and good luck on your search to find a new home!

 

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