how to explain hard inquiry from a collections lawyer

by Pietro Wintheiser 9 min read

The best way for lenders to determine the reason behind the inquiries is to ask for a Letter of Explanation. This letter, which you write, should state the date of the inquiries, the lender reporting them, and the reason. You’ll want to be as detailed as possible in this situation because it could make or break your approval.

Full Answer

What happens when someone makes a hard inquiry on your credit?

Jan 20, 2009 · The law seems pretty clear from my weeks worth of reading that unless it was some sort of credit related transaction it's not permissible purpose. Plus, the debt the collection who gave me a hard inquiry is trying to collect on an expired debt, both out of SoL and …

How does a court decide if a collection agency's claim is legitimate?

Apr 26, 2022 · A hard credit inquiry may lower your credit score, though how much your score decreases varies based on individual credit history. A single hard inquiry may decrease your credit score by five points or fewer. However, the impact of the inquiry depends greatly on your …

How do I answer a debt collector's interrogatory question?

Nov 05, 2019 · A hard inquiry, or a "hard pull," occurs when you apply for a new line of credit, such as a credit card or loan. It means that a creditor has requested to look at your credit file to determine how much risk you pose as a borrower. Hard inquiries show up on your credit report …

What happens after I answer a debt collection lawsuit?

For years, I have represented many businesses who are challenged by non-paying customers. Unfortunately, it is overly optimistic to assume that all customers will pay without legal …

Can a collection agency do a hard inquiry?

Hard pulls, however, are directly connected to financial transactions and can cost your credit score several points each time they occur. Because collection agency inquiries are hard pulls, repeated inquiries from a debt collector can hurt your credit rating.Jul 4, 2013

What do you say when you dispute a hard inquiry?

What to include
  1. Name, address, Social Security number, and date of birth.
  2. Today's date.
  3. Reason for the dispute.
  4. Description of the inquiry (including the creditor's name, date of the inquiry, and page number of where it appears in your credit report)
  5. Request for prompt removal.
•
Jan 14, 2020

What is shown on a hard inquiry?

A hard inquiry, or a "hard pull," occurs when you apply for a new line of credit, such as a credit card or loan. It means that a creditor has requested to look at your credit file to determine how much risk you pose as a borrower. Hard inquiries show up on your credit report and can affect your credit score.Nov 5, 2019

What is the best reason to dispute a collection?

If you believe any account information is incorrect, you should dispute the information to have it either removed or corrected. If, for example, you have a collection or multiple collections appearing on your credit reports and those debts do not belong to you, you can dispute them and have them removed.Sep 30, 2020

How many points is a hard inquiry?

A hard credit inquiry could lower your credit score by as much as 10 points, though in many cases the damage probably won't be that significant. As FICO explains: “For most people, one additional credit inquiry will take less than five points off their FICO Scores.”Mar 10, 2022

What is a 609 letter?

A 609 letter is a credit repair method that requests credit bureaus to remove erroneous negative entries from your credit report. It's named after section 609 of the Fair Credit Reporting Act (FCRA), a federal law that protects consumers from unfair credit and collection practices. Written by Natasha Wiebusch, J.D..Dec 17, 2021

Does hard inquiry mean denied?

Hard inquiries specifically refer to instances when a lender accesses your credit report for the purpose of evaluating you as a borrower. In other words, hard inquiries happen when lenders look at the information in your report to decide whether to approve or deny your application for credit.Aug 14, 2020

What is the difference between a hard inquiry and a soft inquiry?

Hard inquiries appear when you've given someone permission to check your credit report in order to process a credit or loan application — these can also lower your score. Soft credit inquiries don't harm your credit score but do involve someone checking your score.Oct 13, 2021

What is the difference between a hard pull and a soft pull?

A soft pull occurs when you check your own credit. It also counts as a soft inquiry when credit card companies or lenders check your credit on their own to determine if you qualify for a loan or credit card offer. A hard pull occurs when you specifically apply for a new loan or credit card.Sep 21, 2020

What is a goodwill deletion?

The goodwill deletion request letter is based on the age-old principle that everyone makes mistakes. It is, simply put, the practice of admitting a mistake to a lender and asking them not to penalize you for it. Obviously, this usually works only with one-time, low-level items like 30-day late payments.Sep 12, 2015

What should you not say to debt collectors?

3 Things You Should NEVER Say To A Debt Collector
  • Additional Phone Numbers (other than what they already have)
  • Email Addresses.
  • Mailing Address (unless you intend on coming to a payment agreement)
  • Employer or Past Employers.
  • Family Information (ex. ...
  • Bank Account Information.
  • Credit Card Number.
  • Social Security Number.
Apr 6, 2022

How can I get a collection removed without paying?

There are 3 ways to remove collections without paying: 1) Write and mail a Goodwill letter asking for forgiveness, 2) study the FCRA and FDCPA and craft dispute letters to challenge the collection, and 3) Have a collections removal expert delete it for you.Apr 11, 2022

How to dispute a hard inquiry?

To dispute a hard inquiry, write a letter to the credit bureau stating that the inquiry is an error that needs to be removed or corrected. In the letter, list all relevant information about the hard inquiry, including the name of the business who made the inquiry and the date they inquired.

What is a hard inquiry on credit?

Hard credit inquiries occur any time you apply for a loan or credit card. When you apply for a loan, you give the lender permission to check your credit history. When they check your credit report, it may be listed as a hard inquiry. Certain events may trigger a hard inquiry into your credit report. Common hard inquiries occur when applying for:

What is a credit check?

Also known as “credit checks” or “credit pulls,” a credit inquiry occurs when your credit report is viewed. These inquiries occur when you check your own credit report and when other parties check your credit for loan applications, new credit cards and mortgages. There are two types of credit inquiries: hard inquiries and soft inquiries.

What are the two types of credit inquiries?

There are two types of credit inquiries: hard inquiries and soft inquiries.

What is a soft credit inquiry?

A soft credit inquiry is a check into your credit report that will not affect your credit score. Because soft inquiries are not caused by specific applications for loans or credit cards, they are visible only to you when you view your credit report. If you apply for a loan or credit card, lenders will not be able to see these soft inquiries.

Does checking your own credit report hurt your credit score?

There is a common misconception that checking your own credit report will hurt your credit score. Checking your own credit scores with a free service or through some credit bureaus will not lower them because they are listed as soft inquiries on your credit report.

Can hard inquiries affect credit?

Hard inquiries may have a greater effect on your credit score if: You have few or no credit accounts. You have a short credit history. You authorize many inquiries in a short period of time.

What is a credit inquiry?

A credit inquiry is a request by a legitimate business to check the credit history of a potential customer. There are hard and soft inquires, but only hard inquiries will affect the FICO score.

Does a soft inquiry affect your credit score?

Soft inquiries include inquiries that the person makes on his or her own credit score as well as inquiries made by businesses that want to send promotional material or offers for credit cards.

How long does it take for a credit report to be removed?

It may take from 30 to 45 days for the dispute to be researched by the credit bureau. They need to contact each company to determine if the inquiry was authorized or not. Any unauthorized inquires will be removed from the consumer’s credit report.

How long does it take to update your credit report?

It may take up to 30 days to update the credit report. The consumer should order another copy of their credit report after 30 days to make sure the unauthorized inquires have been removed. Here is a sample hard credit inquiry removal letter. It needs to be sent by certified mail to each of the three main credit bureaus.

What happens when a collector files a small claims lawsuit?

If the collector files its lawsuit in small claims court, you'll probably first get notification about the suit. Then, the parties go to court for a trial in front of a magistrate or other judicial officer. Typically, a written answer is optional and rules of evidence are inapplicable.

What happens if a collector files a summary judgment?

If the judge grants the motion, the court will enter a judgment against you without a trial.

What is a debt collection lawsuit?

A debt collection lawsuit begins when the collection agency files a “complaint” (sometimes called a “petition”) in court. The complaint will explain why the collector is suing you and what it wants—usually, repayment of money you owe, plus interest, fees, and costs.

How long does it take to file a lawsuit?

Generally, you’ll get around 20 to 30 days to file a written answer to the lawsuit with the court. You’ll have to respond to the allegations in the complaint and raise any defenses you have, like that the statute of limitations (the law that sets a time limit on the right to file a lawsuit) has expired, or counterclaims against the collector, such as violations of the Fair Debt Collection Practices Act.

What is a summons in court?

The summons informs you that you’re being sued, and gives you information about the case, like the deadline to file a formal response, called an “answer,” in court.

What is discovery in a lawsuit?

“ Discovery ” refers to the formal procedures that parties in a lawsuit use to get information and documents from each other to prepare for trial or settle the case. If you don’t raise any defenses or counterclaims, the collector probably won’t engage in discovery. But if you have a good defense or file a counterclaim, you and the collector might want to participate in discovery.

Do debt collectors go to trial?

Most debt collection cases don’t get to trial; they settle, or the collector gets a default or summary judgment. Most collectors win their cases by default, without ever having to go to court. If you do go to trial, you—or your attorney, if you hire one—will have to present your case according to specific rules of procedure and evidence. At the end of the trial, the judge (or jury, if applicable) will make a decision. The judge or jury’s decision is then entered in the court records as a judgment, and it becomes official. (To learn about how the collector can use a judgment against you, read Types of Debt and Debt Collection Practices .)

What is a credit inquiry removal letter?

A credit inquiry removal letter is used to dispute an unauthorized inquiry. It is sent to the credit bureaus to request that a credit inquiry be removed. Once the credit bureaus receive your letter they are obligated to investigate your claim with the creditor who placed the inquiry on your credit report. Under the Fair Credit Reporting Act, the ...

How long does a credit inquiry last?

All credit inquiries are listed on your credit report for two years. After that, they should fall off naturally. On the plus side, an inquiry only affects your credit score for one year. Once that period is up, your score should rebound a few points.

Can credit inquiries affect your credit score?

Credit inquiries don’t have a major impact on your credit score. However, if you have too many in a short period of time, they can definitely damage your credit. That’s why it’s important to have unauthorized credit inquiries removed from your credit report.

How long does it take for a credit report to be removed?

Under the Fair Credit Reporting Act, the information provider has 30 days to report back to the credit bureau with proof that you authorized the credit inquiry. If they fail to respond or fail to provide proof, the credit inquiry must be removed. Credit inquiries don’t have a major impact on your credit score.

When do Credit Inquiries Hit Your Credit Report?

Any time that you apply for new credit, you’ll see a credit inquiry on your credit report. If you fill out an application and actively apply for new credit, that lender will send a notification to the credit bureaus right away. This lets other lenders know that you are actively applying for credit with them.

Why do Lenders Care?

Now, the bigger question is why would lenders care about the credit inquiries on your credit report. Isn’t it your business if you applied for credit elsewhere?

When Credit Inquiries can Hurt Your Approval

There is one instance when credit inquiries can hurt your approval – when they resulted in new credit. This means the lender has to go back to the drawing board and determine your debt ratio. If the new debt ratio is higher than the allowed maximum for the loan program, you may not be eligible for the program any longer.

The Reason for the LOX

Lenders want the Letter of Explanation to determine why you applied for new credit. It’s not always because they want to know if you took out new credit. They want to know why. For example, are you short on cash and need money quickly? This would be a red flag for the lender.