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A credit repair company may be able to remove a hard inquiry from your credit history for a fee, but this is something you can do by yourself—for free.
It's important to be aware of inquiries on your credit report not only to see who is requesting your credit history, but also to make sure only legitimate entities are getting your credit information. Why? Because inaccurate or fraudulent inquiries could be hurting your credit scores or, even worse, could indicate you've been a victim of identity theft. Read on to find out more about inaccurate inquiries and why it's usually best for you to dispute them yourself.
How Do Credit Repair Companies Work?
Credit repair companies charge consumers a fee to remove inaccurate information from their credit reports. They may charge hundreds or even thousands of dollars to find inaccurate negative information in their clients' credit histories and dispute them with the major consumer credit bureaus.
Credit repair companies don't have any special way of disputing inaccurate information that isn't available to the general public. In fact, these companies are regulated by the Credit Repair Organizations Act (CROA), a law that requires them to provide clients with a written contract specifying the services they will provide, and offer those clients three days to cancel the contract. Furthermore, these companies can't promise to remove accurate information or accept payment until they fulfill the contract. For more information, see "How Does Credit Repair Work?"
That means that you have as much power in your own hands to get inaccurate or fraudulent inquiries deleted from your credit report—without paying for it.
What to Do if You Have Inaccurate Inquiries
The first step to determining whether you have inaccuracies in your credit file is to get a free credit report and go over it in detail.
There are two types of inquiries that can appear on your report: soft inquiries and hard inquiries. A soft inquiry is usually the result of a pre-screened or preapproved credit offer from a company that you already have a relationship with, or of you getting a copy of your credit report. Soft inquiries have no effect on your credit score, so there's no reason you'd need to get them removed.
On the other hand, a hard inquiry reflects an actual application for a new credit account. Having a couple recent hard inquiries on your credit report is unlikely to have a significant impact on your credit score. But having several recent hard inquiries can have a bigger effect on your score. The more recent the inquiry, the more effect it will have. (Hard inquiries stay on your credit report for two years, but FICO® Scores* don't consider hard inquiries greater than 12 months old.)
When you see a hard inquiry you don't recognize, there are several steps you can take. First, contact the company listed on the report, as it may be an inquiry that you approved but one that's listed under an unfamiliar company name or acronym. Other unfamiliar inquiries could be from services that shop around for different offers. Thankfully, credit scoring formulas consider repeated inquiries in a short period of time to be applications for a single loan, limiting their effect on your credit score.
But if you've investigated the hard inquiry and determined that you didn't authorize it, you can dispute it as fraud. To do that, contact the company that reported the inquiry, as well as the credit reporting bureaus (Experian, TransUnion and Equifax).
How Disputing Inquiries Impacts Your Credit
By itself, filing a dispute won't impact your credit score, but it could affect your score if the information on your report changes as a result of your dispute. For example, if there are multiple recent hard inquiries on your report that you didn't authorize, your credit score could rise if this information is removed as a result of your dispute.
Protecting Your Credit
Disputing fraudulent inquiries is only one aspect of safeguarding your credit history. And since only fraudulent hard inquiries can be removed from your credit report, you need to take extra steps to protect your identity. For example, you can request temporary fraud alerts on your credit report for one year, and victims of identity theft can request extended fraud victim alerts that last for seven years. You can also request a security freeze on your credit report that's designed to prevent new credit accounts, loans and services from being opened in your name. However, keep in mind that a security freeze can also delay or interfere with the approval of loan applications that you submit; you need to know how to remove a security freeze when you want to apply for credit. Learn more about preventing fraud.
When it comes to removing fraudulent inquiries from your credit reports, a credit repair company is simply asking for money to perform a service that you can do for yourself. By understanding what credit repair is and how it works to remove unauthorized inquiries, you can make an informed decision the next time a company advertises that it can improve your credit for a fee.
Editorial Disclaimer: Opinions expressed here are author's alone, not those of any bank, credit card issuer or other company, and have not been reviewed, approved or otherwise endorsed by any of these entities. All information, including rates and fees, are accurate as of the date of publication.
This article was originally published on July 9, 2019, and has been updated.
*Credit score calculated based on FICO® Score 8 model. Your lender or insurer may use a different FICO® Score than FICO® Score 8, or another type of credit score altogether. Learn more.