Credit Report: Questions and Answers

Why are credit reports important?

Whether you realize it or not, credit reports play an important role in your everyday life. They help customers purchase goods at the store, borrow money, buy cars, pay for college education, and purchase a home, as well as, assist in many other financial matters. Credit reports help with all of these financial transactions by providing vital information so retail stores can cash customer’s checks, banks can provide debit and credit cards to their clients, financial institutions can give their customers loans,and businesses can better manage their financial dealings, all of which impact the global economy.

What is a credit inquiry?

Many people do not understand exactly what a credit inquiry is and how it may or may not affect their credit score. A credit inquiry is a listing of all the different creditors, or authorized parties, who have accessed your credit report. There are two types of credit inquiries, those that affect your credit score and those that do not. The first type is referred to as a hard inquiry, and is an inquiry that you initiated by completing a credit application for a financial institution or other creditor. These inquiries receive access to your entire credit report, but they must have a legitimate business request or obtain your explicit permission. These creditors are listed on your credit report, so you know who has received access to your information. If there are too many inquiries, it can have a negative impact on your credit score. The second type of inquiry is referred to as a soft inquiry and this does not have any impact on your credit score. People who are only accessing the information for promotional purposes, like to offer you pre-approved credit cards make this type of inquiry. They are only given access to your name and address and are not provided with any other data within your credit report. They are not listed on your credit report.

Does divorce affect your credit report?

If you are recently divorced, it is important to understand the rules regarding your credit report. First, you should realize that a divorce order does not automatically release you from your legal responsibility to a creditor. In order for you to have this information properly
taken off your credit report, you must contact each creditor separately. You need to ask them to provide you with a legally binding release from your obligation. Once you have this release from each creditor, you can have those accounts taken off your credit report.

Is it recommended to use a company that promises to fix my credit score?

This decision is entirely up to you, but be careful what company you select. Do not choose any company that make promises to remove information from your credit report that is accurate. There is no means by which you can remove information from your credit report, unless you can prove that the information is inaccurate. While these companies may contact your creditors and help set up payment plans, there is really nothing they can do that you cannot do by contacting the creditors yourself. In the end, only thing you can do to fix your credit score is make arrangements to pay off any unpaid balances and over time it will improve.

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