Avoiding Over-Inquiries

There are two types of credit inquiries that can be made to your credit report: hard inquiries and soft inquiries.

A hard inquiry occurs when you seek to obtain credit. This happens when you apply for a loan or credit card, for example. Each time you fill out a credit card application at a department store, the inquiry counts as a hard inquiry. Only you can authorize a creditor to perform a hard inquiry on your credit report.

A prospective lender or other creditor will likely be concerned with an applicant whose credit report shows a high volume of hard inquiries. That's because it suggests a carefree attitude in applying for credit or an effort to borrow excessively.

Borrowing too much -- a situation called over-leveraging -- is a potential red flag for creditors. It signals you may face more difficulty in repaying your debts in cash-strapped times than a person who judiciously applies for credit.

If you're going to ping your credit report with frequent hard inquiries, it may be best to concentrate them around the time you apply for a home or auto loan.

Fair Isaac, which designs credit-scoring software and sells consumers copies of their credit scores, suggests that your credit score is less likely to be impacted by a concentration of hard inquiries around such circumstances.

A soft inquiry is one where the inquiry is not tallied on your credit report. A soft inquiry does not constitute a bona fide request for credit. For example, a soft inquiry occurs when you obtain a copy of your report.

A soft inquiry also occurs when a company gathers potential marketing information about you based on your credit report. You can opt out of these kinds of inquiries. The Fair Credit Reporting Act entitles you to contact each or all of the major credit bureaus and request them to stop sending you card solicitations and related offers. For more information, call 888-5OPTOUT (567-8688).