Definition - What does Inquiry mean?
An inquiry is the request made by certain individuals, businesses, financial institutions, or lenders to access an individual’s credit report.
Under the Fair Credit Reporting Act, only certain entities are allowed to request a consumer’s credit report, which includes: those a consumer has authorized access for in writing, those with a legitimate need and those who are authorized access to prescreen certain applications for offers of credit. In some cases, employers as well as an insurance company may also have the legal right to access a consumer’s credit reports if they have received permission from the consumer.
Consumers who suspect that their credit report has been accessed illegally can request a copy of their credit report. All inquiries are listed on a consumer’s credit report.
Justipedia explains Inquiry
Before shopping for a car, applying for a mortgage, or taking out a student loan, it’s important to understand how an inquiry can affect your credit score. In some cases, if the above financial actions are taken within a short period of time, they may be treated as one inquiry.
Inquiries that are made by companies marketing products to consumers also do not lower a consumer’s credit scores. If, however, a consumer decides to apply for multiple credit cards within a limited period of time, these will appear as multiple inquiries and can minimally lower a consumer’s credit score.
How important are inquiries? Research indicates that consumers with a substantial number of inquiries can be a higher credit risk. Credit scores, however, are only slightly affected by inquiries.
In fact, it’s much more important for individuals to pay their bills on time and make sure that their debt to equity ratio is within the specified target range than to worry too much about whether or not they have multiple inquiries on their credit report.