Do You Care That Businesses Can Check your Credit Report?

Are you aware of the fact that businesses can check your credit report without asking you for the permission to do so? You probably know that credit card companies will check your credit report whenever you apply for a new credit card (and sometimes for other reasons as well) but did you know that there are a variety of other businesses that may check your credit report? Perhaps you think that this doesn’t matter. Well, it does. Every time that a business does an inquiry on your credit report, there is the chance that your credit score is going to get decreased. You don’t want that to happen.

The first thing that you need to understand is that there is a difference between a “soft inquiry” and a “hard inquiry”. When you check your own credit report that is a soft inquiry. When a credit card company checks your credit report for the purpose of offering you a prescreened credit offer that is usually a soft inquiry. Most other inquiries are hard inquiries. You don’t have to worry about soft inquiries because they don’t impact your credit score but you should definitely be aware of the fact that hard inquiries can cause your credit score to be decreased – for no other reason than because someone looked at your credit report!

If anyone has ever told you that you shouldn’t apply for too many credit cards because it can lower your credit score, this is the reason that they have told you that. Every time that you file for a new credit card, the credit card company is going to do a hard inquiry on your credit report and your credit score is going to take a small hit. You should always be careful about only making smart applications to credit cards and loans that you really want and that you have a good chance of qualifying to get.

Unfortunately it isn’t just credit card application inquiries that you need to worry about. There are actually a lot of different businesses that can request your credit report. For example, did you know that when you rent a car using a debit card instead of a credit card, the rental agency has the right to check your credit report to make sure that they want to lend you the car? And yes, if they do that, your credit score may go down. Your credit card companies may do periodic hard inquiries into your credit report. And anytime that you conduct a business transaction, you may be opening yourself up to a look at your credit report.

The good news is that you don’t have to sit back and let your credit score go down because businesses are looking at your credit report. You should request your credit report annually and review the inquiries that have been made. You can dispute inquiries (like the rental car situation) and there is a chance that your credit score may be improved as a result of your dispute. At the very least you should be aware that this is happening!