Q. I submitted a request for an online personal loan and that kept sending me to different loan companies and they failed to tell me that all of them would be pulling my credit score and now my score lost 51 plus points in 3 days. Help me, please.
Seeing your credit score drop so quickly can be intimidating, especially if you are actively looking for new credit. To get back on track, you should start by reviewing your credit report to figure out why multiple inquiries have caused your score to drop so much. According to FICO, the company behind one of the credit scoring models used by most lenders, most people can typically expect to see a credit score drop of less than five points per inquiry. However, multiple inquiries can have a more significant impact if you have a few accounts or a short credit history. If this is your case, it may be possible that multiple inquiries have caused your score to be hurt significantly.
If, as you mentioned, the online personal loan service you used failed to inform you about multiple lenders making credit inquiries on your behalf, you can probably dispute these inquiries to have them removed from your credit reports. You have a right to contact the three main credit bureaus (Equifax, Experian, and TransUnion), and dispute any incorrect information that creditors or lenders may have reported about you, including unauthorized credit inquiries. The fastest and easiest way to dispute information on your credit reports is online, but you can also fax or mail them. To file your dispute online, you will have to visit each of the credit bureaus and follow the dispute process. The process may sound intimidating, but if you follow instructions, you will be able to complete it on your own. Before you start the process, make sure you review each one of your credit reports. If you don’t have a copy, you can get them for free every 12 months from annualcreditreport.com or from the bureau directly if you’ve been denied credit recently. You should also gather any information that will support your claim that the inquiries were unauthorized, including the names of the lenders involved with these inquiries. You can expect the credit bureaus to provide the result of their investigation within 30 days after they receive your dispute. If the results are not as you expected, you can add a written statement to your credit reports, and it will be visible to lenders reviewing your credit.
You should remember that the combined total of your credit inquiries account for only 10% of your credit score. Even though multiple inquiries can raise a red flag to creditors and hurt your score, it’s not the most influential factor on your score. So, regardless whether the dispute removes the negative information on your credit report or not, you should focus on increasing your score by always making on-time payments and keeping your credit balances low. But for a more personalized strategy, you can talk to an NFCC-certified credit counselor. Together, you will review your credit report, and your counselor can give you an objective assessment of your credit and suggest a plan to help you increase your score. You must be patient. Credit scores tend to drop faster than they increase, but it is always possible if you use and manage your credit wisely. You are almost there. Good luck!
Bruce McClary, Vice President of Communications
Bruce McClary is the Vice President of Communications for the National Foundation for Credit Counseling® (NFCC®). Based in Washington, D.C., he provides marketing and media relations support for the NFCC and its member agencies serving all 50 states and Puerto Rico. Bruce is considered a subject matter expert and interfaces with the national media, serving as a primary representative for the organization. He has been a featured financial expert for the nation’s top news outlets, including USA Today, MSNBC, NBC News, The New York Times, the Wall Street Journal, CNN, MarketWatch, Fox Business, and hundreds of local media outlets from coast to coast.
*Some questions have been shortened and/or altered for publication purposes while others have been published as is.