How to dispute unauthorized credit report inquiries
By Minda Zetlin
You already know that if you see a negative item on your
credit report that isn't true, you should dispute it. But did you know the same
goes for credit report inquiries you don't recognize or didn't approve?
Though disputing unauthorized inquiries is less common than
disputing incorrect information, it's likely to be worth the effort. For one
thing, inquiries may have a negative effect on your credit score and could cost
you a loan approval or lower interest rate, particularly if there are several
of them. More important, an unrecognized inquiry could be an early sign that
you're about to become a victim of identity theft.
What should you do if you see an inquiry on your credit
report, but don't remember authorizing it? The process is a little bit
different than that for disputing negative credit account information.
1. Make sure you
weren't being prescreened
Just because you don't recognize an inquiry doesn't mean
it's not legit. Check your credit report carefully to make sure the inquiry
wasn't done for promotional purposes, in advance of offering you a prescreened credit card or other loan, for example. Lenders planning to extend such offers
are allowed to view your credit report without your permission, but their
inquiries should be clearly marked as promotional on your credit report.
These inquiries aren't a red flag for fraud, and they're
" inquiries. A "hard" inquiry typically occurs when you do
something to request credit (such as applying for a credit card or loan). Such
inquiries appear on your credit report when it is sent to creditors, and will
lower your credit score slightly, typically by five points or less, for up to
12 months. Soft inquiries, on the other hand, have no effect on your credit
score. Besides pre-screening, other soft inquiries include those from employers
or insurance companies, as well as those from current creditors who are simply
reviewing your account. (If you like, you can choose to opt out of pre-screening,
either for five years or permanently unless you opt back in. To learn more, visit
optoutprescreen.com or call 888-567-8688.
2. Check your calendar
You don't recognize the inquiry, and it wasn't marked as
promotional. But have you gotten an insurance quote, a new account with a
utility or rented a new place? Any of those could result in a legitimate credit
"A common source of confusion is when someone applies for a
retail store account," says Rod Griffin, director of public education at
Experian. Although a store card is branded with the store's name, most
retailers contract with banks or other lenders to actually issue the cards and
service the account. "The name of the lender will be on the inquiry," Griffin says. "People
don't recognize it because it doesn't have the name of the retail store."
Similarly, if you've applied for a job that requires a credit check (and if so,
the company has to request your permission to check your credit), a third-party
company that provides employment screening may be the one that checks your
If you've retained the paperwork from your store card or job
application, it may name the organization that will actually be checking your
credit report. Or you may be able to deduce who it was based on the date of the
inquiry. But if after reviewing your activities you still don't recognize the
inquiry, it's time to take action.
3. Ask for more information
You need to know more about whether and when you authorized
the credit inquiry, or if it was legally initiated. The easiest first step is
to call the company that did the inquiry and ask for more information. "If you
first want to make sure you truly do not know who made the inquiry, then by all
means start with a phone call," says Marc Bourne, vice president, Know It All Intelligence
Group, which provides employer screening and investigations.
The advantage to doing this is that you may clear the
question up quickly since most inquiries are legit. "You might not recognize
the name, but it turns out to be the lending arm of a company you're doing
business with or a new utility," says Liz Weston, a personal finance columnist and
author of "Your Credit Score." "It doesn't hurt to dispute it, but my
experience has been these kinds of inquiries tend to be someone with a
The disadvantage of calling is that it may be a waste of
time. "Certain creditors will not give you any information over the phone,"
Bourne says. "You could wind up sitting on hold for 35 minutes just to find out
that you have to contact them by mail. That's why we suggest doing everything
in writing." The added advantage is that this creates a record of your dispute whereas
a phone call may not.
4. Ask for proof
"If they have your authorization or what they think is your
authorization, they will send a copy of what you signed. Make sure it really is
your signature and information," Bourne says. "Make sure it explicitly grants
the company permission to pull a credit report. Especially for employment
purposes, it may say 'public records' or 'criminal records,' but if it doesn't
explicitly say 'credit report,' they don't have authorization."
Under the Fair
Credit Reporting Act, a credit reporting agency must retain a record of
companies who have accessed your credit report.
|-- Meredith Griffanti
What if the creditor says you gave permission over the phone
or online? They should still be able to substantiate it, Bourne says. They
should have details about when you gave permission and identifying information
to show it was really you. "If it was by phone, they should provide a printout
that says you gave verbal authorization on this date to this operator," Bourne
says. "It should also say what the operator transcribed into their system."
If the proof is something you don't recognize, or the
creditor says you gave authorization at a time when you know you didn't, take
immediate action. Tell the bureau to put a freeze, or at least a fraud alert,
on your account (that bureau should then notify the other two). Also, since
each of the big three credit bureaus (Equifax, Experian and TransUnion) don't
necessarily contain the exact same information, you should check for any
further evidence of fraud that didn't show up on the report you viewed. You can
pull a free copy of each credit report once a year from AnnualCreditReport.com.
5. Dispute the
inquiry with the credit bureau
What if the creditor can't provide proof or just plain
doesn't answer you? "Generally, they have 30 days to respond under the Fair Credit Reporting Act," Bourne says. If they don't make that deadline, it's time
to dispute the inquiry with the credit bureau, he advises. "Let them know you
sent a letter to the creditor requesting confirmation of the inquiry and they
The credit bureau is then required to follow up with the
creditor. "If the credit bureau doesn't get a response either, it has an
obligation to remove the disputed inquiry," says Bourne. Legally, the credit
bureau must respond to you within 30 days. Nevertheless, Bourne says, "Some
credit bureaus don't work fast when it comes to inquiries. They aren't a top
priority, and they are less apt to help you with an inquiry than with a
disputed account or charge."
6. Determine if you
need the inquiry removed
Whenever you encounter an unfamiliar inquiry, your first
priority should be to make sure that it's not a sign of identity theft. If it is, act
quickly to protect yourself. What if the inquiry did come from a
company you do business with, but it didn't have the legal right to view your
credit report? Should you try to have the inquiry removed?
First, make sure the inquiry is not a soft inquiry that
won't be shown to prospective creditors. If that's the case, the report will
say so. You may still choose to take issue with the company that requested the
soft inquiry, but there's not much point in having it removed from the record
since you're the only one who'll ever see it.
How you deal with hard inquiries depends on your situation.
If you're not planning to shop for a loan in the near future, or have serious
credit issues such as late payments or bankruptcy, then disputing a hard inquiry
may not be worth the effort, since any resulting improvement to your score may
not do you much good. If you do plan to shop for a loan soon and every point on
your credit score counts toward getting the best loan rates, then trying to get inquiries removed may be worthwhile,
particularly if there are several of them.
But it may not be simple. "Inquiries are generally a matter
of fact," says Meredith Griffanti, a spokeswoman for Equifax. "Under the Fair
Credit Reporting Act, a credit reporting agency must retain a record of
companies who have accessed your credit report." And while there could be some
disagreement between you and a creditor as to whether a payment was late, it's
usually pretty clear whether or not a company viewed your credit report.
But if your report was obtained illegally, either because of
identity theft or because the company or person who viewed it didn't have the
right to do so, then it shouldn't stay on your report. "We'll work with you to
remove that inquiry," says Griffin
See related: How to dispute credit report errors
, Hard inquiries have limited credit score impact
Published: August 14, 2013
Three most recent Credit scores, credit reports stories: