Using a Credit Monitoring Service Does Not Impact Credit Score

Many third-party organisations offer the facility of credit monitoring to the consumer. Credit monitoring agreement usually involves extending the facility to the consumer way she can check his credit report as any number of times as he likes for a fixed monthly or annual fee. While a credit monitoring programme is usually structured in such a way that the enquiries resulting as a result of the consumer accessing its own credit report is treated as a soft enquiry, and hence not affecting the credit score at all, you should read the terms and conditions of the contract before signing and confirmed with the third-party credit monitoring service as to the impact of using their programme on your credit score.

A notable credit monitoring service is offered by the National credit bureau Experian which allows you to access your credit report directly from the credit bureau. Using the credit monitoring service by experience does not affect your credit score.

Enquiries Made by Employers Does Not Affect Credit Scores

Employers like to view the credit history of potential employees for the purpose of background check. It is also commonly believed that people who have their debt in control have a lesser stress level and perform better at work. Your responsibility towards credit management also shows your responsibility towards your work. An employer needs permission of the employee to view the credit report. However the scallop enquiries are considered soft enquiries which means that they are only shown on your personal copy of the credit report when you choose to access it. Any lender that makes a request for your credit report will not see the enquiries that have resulted from seeking employment.

Hence enquiries made by employers have no bearing on the calculation of the credit score. Also the credit reports that is provided to an employer contains lesser information than one at that is typically provided to lender of the purpose of approving a credit application. The information provided on the credit report to the employer has to be in compliance with the Equal Employment Opportunity Act which means that personal information regarding marital status, date of birth etc is missing from that particular copy.

Impact of Getting Your Credit Score through a Third Party

Whenever your credit report is accessed a record is made into your credit report. This record is called an enquiry. There are two kinds of enquiries, soft enquiry and hard enquiry. Depending upon which type of an enquiry is present on your credit report it may or may not have an impact on your credit score. While a person with a good credit history should not get worried about the impact of enquiries on the credit score because they are mostly temporary, it is still one of the factors that is considered while calculating the credit score.

When a creditor accesses your credit report owing to the application that you have made for a loan or credit than such an enquiry is called and hard enquiry. A hard enquiry has an effect on the credit score. The amount of the effect will depend on the rest of the history present on your credit report.

Other enquiries made by people that are related to non-credit issues such as potential employers, landlords etc are call soft enquiries and do not affect your credit score at all. In fact soft enquiries are not shown to the lenders in their copy of the credit report. They are only shown in your personal copy of the credit report. When you access your own credit report that is also recorded as a soft enquiry which means that you can access your own credit report as any number of times without any worries of impacting your credit score whatsoever.

Sometimes existing lenders access and existing customers credit report for the purpose of updating and making new offers for lower interest rate or enhanced credit limit. These are also shown only to you and have no impact on the credit score. Similarly arrangements with third parties such as credit monitoring service and credit card companies are also usually structured so that the enquiries made by them are treated as soft enquiries.

So if a third party offers a service where they access your credit report and score to share it with you it will generally be counted as a soft enquiry and will not have an impact on your credit score. Many of the credit monitoring services work on this principle. Your own credit card company may offer to share your credit score with you as a form of additional service had to provide. Before accepting you should however clarify as to whether or not a hard enquiry will be made on your credit report or not.

Finding out Who Has Checked Your Credit Report

Finding out who all have checked your credit report in the past is a simple matter of ordering a personal copy of the credit report from one or all three of the credit bureaus. You are eligible to get a free copy of your personal credit report from each of the credit bureaus once every 12 months. This makes you eligible for 3 feet credit reports one from each separate credit bureau Experian, TransUnion and Equifax. You can do so by logging on to

You might also be eligible for a free copy of your credit report in other circumstances such as an adverse action has been taken against you based on the information present on your credit reports like disapproval of a credit application, if you’re looking for a job etc.

Whenever someone accesses your credit report or makes a request a record is created on the credit report which is called an enquiry. There are two kinds of enquiries hard and soft. The heart enquiries are the ones which result from an application being made for a credit or a loan. Soft enquiries are generated as a result of people accessing your credit report for matters which do not pertain to credit and lending such as enquiries made by prospective employers, landlords, insurance companies, preapproved credit offers etc.

Only people and organisations that have the right to access your credit report under the fair credit reporting act can access your credit report, while some such as employers and landlords require written permission from you not to do so.

If the only other way someone can access your credit report is if the person has enough of your personal identifying information to pass the identity test online. Which is why it is recommended that you do not share personal information and financial details with people. You should safeguard documents that contain information that might compromise your financial integrity even when you are disposing them off such as gold credit card bills etc.

If you want to monitor your credit report frequently as well as who is accessing it to can sign up for a credit monitoring service which allows you to check your credit report as many times as you like. Accessing your own credit report also does not count towards the calculation of the credit score no matter how many times you do it.

What Is Shotgunning and Its Effect On Credit Score

Shotgunning is the name that has been given to the practice of quickly applying for credit with multiple lenders in a short amount of time for the same credit incident. This usually happens when a person is looking for a loan for an automobile or mortgage. The mortgage broker of the automobile dealer may send the application of the consumer for a loan to various lenders in order to get the best deal. This results in the various different lenders making enquiries into the credit report of the consumer resulting in multiple enquiries.

Most of the credit scoring models are now quoted recognize the practice of shotgunning and consider multiple enquiries made for the same credit incident as one single enquiry of the purpose of calculating the credit score. The timeframe in which the credit scoring models will consider multiple enquiries as one single enquiry differs from one model to another although the average is about 14 days.

Before going to make a large purchase such as a home or an automobile the consumer has advised to get his own copy of the credit report from the credit bureau in order to know where he stands in the lender’s perspective and to work on any areas that might need improvement. The consumer is also advised to get a copy of the credit score at least once in order to get a better understanding of the various factors that affect the credit report both positively and negatively.

Insurance Enquiries to Not Affect the Credit Score

The fair credit reporting act allows insurance companies to review the credit reports of the insured since the time that it was enacted in 1972.

Enquiries made for the purpose of insurance are also treated like preapproved credit offers and hence come under the category of soft enquiries. They are not shown to the lenders in their copies of the consumer credit report and hence are also not considered in the calculation of the credit score.

Insurance companies are allowed to view the credit report of a consumer because it is believed that the credit score of a person also reflects as to whether he will be able to make the payments for the premium in the future not.

Specialised insurance credit scores have been developed recently which also provide additional analytical information to the insurer for the purpose of determining the interest-rate and that the premium amounts to charge different customers based on a different credit scores. They also can predict the likelihood of different consumers in making a claim in the future.

Enquiries Made by Existing Creditors Do Not Affect Credit Scores

It is well known and understood that the creditor makes an enquiry for a consumer’s credit report when the consumer makes an application for credit.

A lesser known fact is that your existing creditors with whom you have a working credit account with may continue to make enquiries into your credit report in the future for the purposes of verification and updating your account. These kind of enquiries made by existing lenders into your credit report do not get counted towards the calculation of your credit score. You will be able to see the enquiries made by your existing lenders on your personal copy of the credit report but the same will not be shown to other lenders in their copy., example of an existing lender making an enquiry into one of his customers credit report says that of a credit card company. Whenever a credit card company has to extend a special offer to the cardholder such as an increase in the credit limit or a lower interest rate they checked the credit history of the customer. Checking the credit history of customers may also be done periodically by the lender in order to keep updating the account.

Enquiries have a minimal impact on the credit score of a consumer who has a good credit history. While enquiries made the existing lenders will not count towards the final calculation of the credit score if other negative information is already impacting the credit history of the consumer, fresh enquiries made due to application for new credit will impact the credit score and for a person who is suffering from a marginal credit rating may prove to be quite disadvantageous.

Enquiries on their own very rarely the reason for approval of the disapproval of a credit rating. But for a person who is already suffering from negative information on the credit report presents of multiple enquiries due to new applications were credit might signify that the consumer is trying to take on more debt which he may be unable to pay off in the future.

Multiple Inquiries of Any Kind Are Treated As Single Enquiry

We have stated in the previous columns that whenever multiple inquiries occur for the same loan application, it is treated as a single inquiry by the credit scoring model. This is regardless of the kind of the loan that has been applied for. It is understood that consumers shop around for the best deal whether they are looking for an automobile loan or a mortgage.

So when you apply for loans with multiple lenders for the same house or for the same purpose, it will be counted as one inquiry on your credit reports long as the inquiries take place within 14 days.

Owing to this fact, you should also not worry about the impact on your credit score.

Sometime a mortgage broker or an automobile dealer forward your loan application to multiple lender in order to find the best deal for you . this practice is called shotgunning. Multiple inquiries resulting from shotgunning will also be counted as one.

So whether you are looking for a car loan or a mortgage, do not hesitate in going to various lenders because you are worried about the impact on your credit score.

Enquiries from Employers Are Only Shown on Your Personal Credit Report

It has become a common trend of the day for prospective employers to want to access the credit history of the potential employee. It is commonly believed that people with good credit rating and lesser debt burden perform better at their jobs. An employer can only be you your credit report once you give them your written permission. However as to the question whether an enquiry from an employer on your credit report will affect your credit rating or not the answer is, though it will not.

The enquiry made on your credit report by an employer is only shown on your personal copy of the credit report. Since this information is not disclosed to the lenders it is also not considered during the calculation of the credit score. As mentioned several times in our previous columns enquiries that pertain to a non-credit nature are listed as soft enquiries and do not impact your credit score. Other examples of enquiries that our considered to be soft enquiries are preapproved credit card offers, insurance, enquiries made by government organizations for verification, accessing your own personal copy of the credit report etc.

Why Are Inquiries Used As A Part of the Credit Scoring Model

Inquiries really have a large impact on the credit score of person. However, they will be listed by all credit bureaus as part of factors that affect your credit score. The reason is that an enquiry represents a debt that has still not found its way on your credit report as an active account. An enquiry made as a result of your application for credit represents a situation where you are undertaking more debt. Since this information may be of importance to the future lenders where they decide whether to extend you further credit or not in the face of how much credit you already have written to you, inquiries are considered while cultivating the credit score. Multiple inquiries may represent the fact that you are trying to undertake more debt than you can handle. Since these credit accounts may not yet appear on your credit report this information becomes crucial for lender to decide on your credit application.

However, inquiries are almost never a single factor for denial of credit to a consumer. Inquiries coupled with the fact that you already have a bad credit history may result in denial of credit. Although the impact of an enquiry on a credit report is minimal if you already have a marginal credit score the reduction of your credit score by a few points as a result of inquiries may put you in a bad risk segment in the lender’s eyes.

When you already cannot manage the debt that you already have applied for more credit concerns lenders because the potentially new loan could put you under more pressure and financial constraint putting you in a situation where you are more likely to to have trouble paying your debts in the future.

For people who have a strong credit history inquiries not important and significant to their credit score. While they may have a minimal impact it is usually temporary.

As to why an enquiry may be listed as a factor affecting the credit score even for a person who has a good credit rating is that the credit reports tried to list all factors that affect the credit score. If there isn’t much negative information affecting your credit rating inquiries are listed as a risk factor because there is little or nothing else affecting the score.

It is usually advised not to apply for credit three to six months prior to making a credit application for a major purchase.