Who can look at your credit report and will it lower your credit score?

Many people use credit monitoring to alert them when someone has looked at their credit report.  Others use an identity theft protection service to alert them of a new application for credit in their name.  Some use both.  A key part of controlling and protecting your credit score is to know who is looking at your credit report and why.

Here are the three main ways others can look at your credit report:

1.  Those you give your permissions to.

If you give your permission to a third party to access your credit report they still need a permissible reason, such as, when you are applying for a credit card, auto loan, mortgage or a job.

This is called a hard credit report inquiry and this will lower your credit score, except in the case of your job application.

2.  Your creditors.

Creditors you have an open account with may look at your credit report to see how your overall credit is being maintained.  They look for sudden financial stress or defaults on other obligations as a guide for determining your open accounts status and overall credit risk.

This is called a soft credit report inquiry and it will not lower your credit score.

When a creditor sells your unpaid debt to a debt collector, they can access your credit report.  It will be a hard credit report inquiry lowering your credit score.

3.  A government and law enforcement need.

Governments at all levels (local, state and federal) along with law enforcement have access to your credit report for a wide range of reasons.  Details of this will be in the next blog, please stay tuned.

This is usually a hard credit report inquiry that will lower your credit score.  However, that is not always the case such as a check by Welfare.  Some law enforcement access to your credit report is never revealed and will not lower your credit score.

When your credit score is lowered by a hard credit report inquiry, it is usually by 8 points, on a scale of 350 to 850, bad to excellent.  Depending upon where your credit score is, this could have a profound effect on your ability to get credit or loans.  This is especially true if you have multiple hard credit report inquires in the last six months.  Mortgage applications and multiple hard credit report inquires, in a 30 day period, are counted as one inquiry.

This 8 point deduction stays on your credit report for up to two years.  However, only the last six months takes the full 8 point deduction.  After that it is lower.

In two years the hard credit report inquiry is required by law to be removed from your credit report.

Soft credit report inquires are never count against your credit score.  Also, when you subscribe to a credit monitoring service and look at your credit report, it is never counted against you either.

What can you do?

Get alerts whenever someone accesses your credit report.  Do to this effectively you need to have not only strong identity theft protection, but credit monitoring as well.  Having only one or the other is not enough.

SmartCredit.com has both.  It’s Always Active Complete Protection, guards both your credit and identity.  You will get alerts whenever someone accesses your credit report.  The Rapid Response feature puts action buttons right on your mobile phone allowing you to stop identity theft with the simple push of a button, avoiding the need to login or call anyone.

David B. Coulter – Founder and C.E.O. of SmartCredit.com

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