Understanding Credit Repair and How to Handle Inaccurate Inquiries

At O1ne Mortgage, we understand the importance of maintaining a healthy credit score. Your credit report plays a crucial role in your financial well-being, and it’s essential to ensure its accuracy. In this blog, we’ll explore how credit repair companies work, how you can dispute inaccurate inquiries yourself, and the impact of disputing inquiries on your credit. If you need any mortgage services, don’t hesitate to call us at 213-732-3074. We’re here to help!

How Do Credit Repair Companies Work?

Credit repair companies often promise to help you remove negative information from your credit report. They typically charge you through monthly subscription fees or per item successfully removed from your report. However, it’s important to note that these companies use the same dispute process that you have the right to use for free.

Credit repair companies are regulated by the federal Credit Repair Organizations Act (CROA). This act requires them to provide a written contract specifying their services and charges. They are also forbidden from claiming they can remove accurate credit report entries and from collecting payment until they fulfill the contract. Additionally, the CROA mandates that contracts include cancellation forms, allowing you to cancel the deal within three business days without incurring charges.

In essence, everything a credit repair company does, you can do yourself for free. The process is straightforward and easy to follow.

How to Dispute Inaccurate Inquiries Yourself

Correcting an inaccurate hard inquiry involves reviewing your credit reports and following the appropriate procedures. Here’s a step-by-step guide:

1. Get Copies of Your Credit Reports

Regularly review the accuracy of your credit reports from all three national credit bureaus: Experian, TransUnion, and Equifax. You can obtain a free copy of each report once a week at AnnualCreditReport.com.

2. Locate and Review Hard Inquiries

Each credit bureau organizes its credit report differently, but all reports include a section for inquiries. Hard inquiries, which are related to credit or loan applications and can affect your credit scores, are listed under their own heading. Soft inquiries, which do not affect your credit scores, are also listed separately.

Check all hard inquiries to ensure you understand where they came from. Note that lender names are often abbreviated, and an inquiry may be legitimate even if the name listed is unfamiliar. Inquiries may also be recorded under the name of a creditor’s parent company. Additionally, entities other than lenders, such as landlords, home contractors, and retailers offering financing, can perform credit checks with your permission.

3. Dispute Any Inaccurate Inquiries

If you find an inquiry you don’t recognize, you have the right to dispute it with the credit bureau that reported it. Each bureau has its own procedures for processing disputes, but all three allow you to submit information online, by phone, or through the mail. Here are the procedures for Experian:

• Online: The Experian Dispute Center is the quickest and easiest way to dispute your Experian credit report. It allows you to submit dispute requests and supporting documents anytime from your computer, tablet, or smartphone.
• Phone: To submit a dispute by phone, call the number on your Experian credit report or dial 888-EXPERIAN to speak with an agent.
• U.S. Mail: You can file a dispute by writing to Experian at P.O. Box 4500, Allen, TX 75013. Printing out and completing a dispute form and following the accompanying instructions can speed up the process.

To dispute credit report information recorded by Equifax and TransUnion, follow the processes listed on their respective websites.

4. If Appropriate, Take Steps to Block Fraud

Unexplained hard inquiries can indicate that criminals have attempted to borrow money or open credit accounts in your name. In addition to requesting their removal from your credit reports, it’s prudent to take defensive action to block potential fraud or identity theft:

• Contact the lender that made the inquiry to inform them of the issue and follow up if they request additional information for their investigation.
• Report the activity to appropriate law enforcement agencies, such as the Federal Trade Commission (FTC).
• Add a fraud alert or security freeze to your credit file to better protect yourself from unauthorized accounts being opened in your name.

5. Keep Watching for Unusual Activity

If you suspect a hard inquiry is related to fraudulent activity, check your credit reports frequently for signs of additional suspicious behavior, such as unfamiliar new loan or credit card accounts or additional inquiries indicating credit applications in your name. Consider using a credit monitoring service to alert you whenever new activity is logged on your credit reports, so you can detect suspicious activity as quickly as possible.

How Disputing Inquiries Impacts Your Credit

You have the right to dispute any credit report entry you consider inaccurate, including inquiries. The act of filing a dispute does not affect your credit on its own, but the removal of a disputed hard inquiry could yield a small credit score increase. However, you shouldn’t expect any major score changes as a result. Hard inquiries have no impact on your credit scores one year after they are recorded on your credit reports, and they are removed from your credit reports entirely after two years.

The Bottom Line

If you discover a hard inquiry that doesn’t belong on one of your credit reports, there’s no need to hire a credit repair company because you have the right to dispute it for free. More importantly, you should take it as a sign of potential criminal activity and keep a close watch on your credit reports. Free credit monitoring from Experian can help in that effort by alerting you to new activity on your Experian credit report.

At O1ne Mortgage, we are committed to helping you maintain a healthy credit score. If you have any questions or need assistance with your mortgage needs, call us at 213-732-3074. Our team of experts is here to provide you with the best service possible.