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What to Do If Your Credit Is Pulled Without Your Consent

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You always make your loan payments on time and manage your credit responsibly. You even check your credit report for mistakes once a year to protect that great score. But what if your credit is negatively affected through no fault of your own?

Certain kinds of credit inquiries can knock down your credit score, and one that is done without your authorization can be especially worrisome. At best, you might have signed up for a service not realizing it would require a credit approval; at worst, it could be a sign of attempted identity theft. Luckily, there are steps you can take to protect yourself and mitigate any possible damage that may occur from an unauthorized inquiry.

What you need to know about unauthorized credit inquiries:

  • An unauthorized hard inquiry could be a sign of attempted identity theft.
  • You should contact the lender and the credit bureau, and consider freezing your credit.
  • Submit a complaint to the Consumer Financial Protection Bureau (CFPB).
  • Always monitor your credit report to catch mistakes early.

The type of credit inquiry that matters most

There are two different types of inquiries, with differing effects on a consumer’s credit score: hard inquiries and soft inquiries.

If someone authorizes a hard inquiry of your credit report, then your credit score will drop anywhere from 5 to 10 points for a year for each hard inquiry. A soft inquiry won’t impact your credit score at all. We’ll go into how these two inquiries differ.

Hard inquiries

When you apply for a mortgage, auto loan or new credit card, for example, the lender will generate a hard inquiry against your credit to evaluate your creditworthiness.

This type of inquiry typically occurs any time a consumer seeks out new credit. The effect varies, depending on the person’s credit profile. Applying for a new credit card may only shave a few points off the score, and credit bureaus typically treat a burst of activity related to shopping for the best rate on a car, home or student loan within a 14- or 45-day time period as one inquiry, which should minimize the blow.

However, multiple inquiries spread out over a longer period of time could do more significant damage to your scores and may impact your ability to qualify for new credit as lenders don’t like to see too many recent inquiries as that may indicate you’re in financial distress. Legally, hard inquiries cannot occur without your permission.

Soft inquiries

While soft inquiries can be made without your permission or even your knowledge, they are only visible on your report to you and do not have any effect on your scores.

A soft inquiry will happen when a lender reviews your credit report for marketing purposes, such as for preapproval or prescreening offers, reviews from existing lenders with which the individual already has an active account or requests by consumers to check their own credit report or credit scores.

How to handle unauthorized hard inquiries

Here are a few steps you can take to address unauthorized hard credit inquiries:

  • Contact the company directly. It could be that the company making the inquiry simply did so in error. Mistakes on credit reports are not uncommon. One congressionally mandated study from the Federal Trade Commission (FTC) showed that 20% of consumers had an erroneous entry that showed on at least one of their three credit reports.
  • Notify the credit bureaus and dispute the inquiry. If your credit was run in error or without your authorization, you have the right to ask the credit bureau in question to delete the inquiry from your credit file. You may need to file a dispute with the credit bureau, as well as with the company that provided the information on the inquiry. The CFPB has sample letters and instructions consumers can use for each.
  • Submit a complaint to the CFPB. The CFPB has handled more than 1 million complaints and states a 97% success rate in getting timely responses to consumers from financial companies through its complaint-reporting system.
  • Regularly check your credit report. Thanks to the Fair Credit Reporting Act (FCRA), consumers are entitled by law to get a free copy of their credit report from each of the three major credit reporting companies (Equifax, Experian and TransUnion) once every 12 months (and during the pandemic, once a week until April 2022). There are also credit monitoring programs that keep a lookout for any changes to your credit reports and identity theft protection services that monitor the internet for “personally identifiable information,” typically for a monthly fee.

What to do if you suspect identity theft

A few additional actions may be advised if you suspect the unauthorized credit inquiries could signal identity theft where someone is trying to apply for credit in your name. Here are some steps to consider if you suspect identity theft:

  • Place a fraud alert in your credit file. This may not always prevent someone from accessing new credit in your name, but it will make it more difficult by requiring additional identity verification steps on the part of the lender.
  • Freeze your credit. Thanks to a federal law passed in 2018, consumers can freeze and unfreeze their credit at no cost at the three nationwide credit reporting companies, which can help prevent fraudsters from opening new credit in your name.
  • Report the inquiry as fraud to the FTC. If you find fraudulent activity, the FTC’s Identity Theft website allows you to submit an affidavit documenting the fraud and helps you start the process of recovering your identity.

The bottom line

Unauthorized credit inquiries can and do happen, for a variety of reasons. But even a harmless mistake on the part of a creditor could do harm to your score. At the same time, fraud and identity theft are on the rise, causing problems for millions of Americans. Paying close attention to your credit, taking steps to protect yourself and knowing what to do should your credit become compromised can help you improve your credit score and keep your score where you want it.

 

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