A credit inquiry is when a third party, such as a mortgage company or a credit card company, requests a copy of your credit report and/or credit score from any of the three credit bureaus. In fact, they are “inquiring” about your credit worthiness.

Do these inquiries negatively affect your credit report/score? That depends. An occasional inquiry for things like a car, house, or education will not be held against you when determining credit risk.  The ones that can negatively affect you are the inquiries for new credit cards or lines of credit. These typically deduct 5 points from your credit score for each inquiry of this type. The ones listed will usually be only recent ones, within a year or so.

Now, if you have several credit card inquiries in a short amount of time, then that will definitely lower your credit score. Multiple clustered inquiries for credit cards put you in a high risk category for the lender. They will wonder why you are scrambling to get a bunch of spending credit in a short amount of time, and will make their decision accordingly. Other credit inquiries that get clustered, such as an automobile loan, are not held against you. To them it just looks like you are shopping around for the best deal on a car you can get, and every place you go they have to run your credit score/report.

Other companies can request a copy of your credit report without you even knowing, unless you have a security freeze on the account. Usually, debt collection agencies will check your credit report periodically so they can stay up to date on all of your past debts and new ones, as well as any updated personal information. They are not required, by law, to inform you that they will be checking your credit.

If you have multiple inquiries on your credit report, you should write to the credit bureau and request that they be removed because you never gave permission to any of the people listed. You will almost always get some of them removed, and the rest will remain, but it is worth the effort. Building and/or fixing your credit is like saving pennies. Each penny by itself is not worth much, but as time passes, the pennies will eventually add up to a large amount of money. Every small step you take will only add to your overall score.

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I will be writing this guide in a series of steps/articles that will take you each step of the way towards greatly improving your credit rating. I will cover every detail in order to maximize your efforts. Check back frequently for new guide steps.

Before doing anything with your credit, you will need to get your credit reports from each of the three major credit bureaus: Experian, Equifax, and TransUnion. If you haven’t seen your credit report for more than a year, then you can get a copy of each free at annualcreditreport.com. I highly recommend doing it this way because it is totally free and you don’t have to subscribe to any service or make any sort of financial investment, plus you get the credit report instantly as opposed to having them mail it to your home. You can read more about getting your free triple credit reports in this post.

Once you get your free credit reports, the first thing you need to do is to print them all out on plain white printing paper. Depending on the quality of your credit, you could have a ton of pages or hardly any; either way you need to print them out for easy reference. Once you have them printed out, it would be even better for you if you could use a three-hole punch on the pages and insert them into a three-ring binder. This will make the task of flipping back and forth through the pages much easier. If you can do this then great, if not then that is fine also.

Spreadsheet Templates

I will create various documents to aid you in your credit repair quest along the way, most of which are just Excel spreadsheets customized for you to begin entering information into right away. The first template I have created for you is the “Erroneous Credit Report Entries Template”. This is just an Excel spreadsheet, designed by me, to aid you in keeping track of all the negative entries on your credit report that you will be requesting validation on. If you do not have Excel, then I recommend downloading Open Office, it is a totally free open source software suite that does everything Microsoft Office can do, without the $400.00 price tag. You can open Excel files with Open Office no problem.

**Click Here to download the spreadsheet template I created for you**

About This Spreadsheet

This spreadsheet has eight columns. Creditor Name is where you put the name of the company claiming the debt. Account Number is where you put the account number of the outstanding account. Type is where you put what type of debt it is, like medical, car, etc.. Past Due is where you enter the amount of money past due as listed on the report, if the amount is different with each report then you can put both amounts in here. Date Opened is when you originally opened the credit account.

The next three columns are columns for each credit bureau, Experian, Equifax, and TransUnion. Sometimes the same debt will show up on one report and not the other two, or on all three, or on two of them. For each debt, check the other two reports to see if it is present there. These columns will show a drop down menu when you click on the arrow to the right of the cell. You will be presented with a list of options. Appears On Report means it is on this particular credit report. Not Present means it isn’t on this particular credit report. Letter Sent means you have sent a debt validation request (credit dispute) letter to this particular credit bureau. Removed means that this particular credit bureau has responded and were unable to validate the debt so it was removed. Validated means that this particular credit bureau responded and were able to validate the debt, so it remains on the report until paid off.

Let’s Begin!

Take each credit report, all three of them, and make sure that the “Personal Information” section information is accurate on all three reports. You would not believe how many people think that this isn’t an important factor when determining credit score. They couldn’t be more wrong. When a creditor runs your credit and asks for a FICO score, the first thing the software does is compare your personal information that you submitted to the creditor to the information contained in all three credit reports. If they differ, then your score goes down, it is that simple. Creditors love predictable, stable people who have had the same job for years and the same residence for years. They also like people who keep the same name for years, and so on. If you have had 10 different addresses in the last 2 years, then the software may think you are a higher risk and calculate your FICO score accordingly.

Make sure all of this information is correct, if not then you can dispute the information by mail, I recommend through the mail because there is a recorded timeline. If doing this by mail, then be sure to use the sample letter we have and submit it just like a creditor dispute, just change the wording and explain that you believe your personal information is inaccurate, be sure to provide the correct info for them in the letter. They will respond to you and either change it or keep the info unchanged.

Next Step

Now, look at each entry in the “Adverse Accounts” section and enter each item into the spreadsheet I provided for you. When entering each item, check the other two credit reports for the same item, then enter the proper selections on the spreadsheet. The spreadsheet I gave you has two example items entered into the sheet; these are for example only and can be deleted. You must enter every item from all three reports. I know it is tedious but tedious people have great credit, and that is what you want right?

You may be wondering why we are entering every single item into the Erroneous Entries spreadsheet. After all, some of them ARE accurate, and you know it, right? The answer is: who cares, even if the account was once legitimate, there is always a chance that your original applications were lost, or the original creditor is no longer in business, or the creditor is inundated with validation requests.

You have nothing to lose by disputing every negative item on your credit report. You can only gain by doing this. Nearly every time I tell someone to do this, there are always one or two entries that the creditor can’t validate, and then they MUST come off your report, even if they are legitimate debts. This is what I call the “Shotgun Approach”, and it always works to some degree. It is a great way to weed out all the debts that you will need to pay off, and the ones you won’t.

Once you have all of the adverse items listed in the spreadsheet, you need to send a dispute letter for each and every one of them. You do this through the mail to each credit bureau’s address. I would submit one letter to each credit bureau and put every item for that credit bureau in a detailed list. Make sure to specify a separate dispute reason for each item, and if this is the first time you are disputing these items, then make every reason “not my account/not my credit card”. This is the reason you should always use at first, if the item remains on your report then you can resubmit disputes as often as you want. You can use a different reason every time if you wish. If you do this, then the credit bureau is required by law to respond to each and every one within 30 days. NEVER SUBMIT ONLINE, you make it easy for them, plus you cannot dispute specific information in the Credit Reports.

Once you have submitted the disputes to each credit bureau, track the results using your spreadsheet. As each dispute is resolved in one way or another, enter the status in the spreadsheet column for the corresponding credit bureau. This process can take a few weeks; the creditor has 30 days to validate the debt. After that, it must be removed. If the debt is legitimate, then that creditor may re-report the debt to the credit bureau all over again. Chances are that if they didn’t validate it within 30 days, they won’t re-report it. It does happen though, so if it pops up again, then you know why. The objective is to get every item possible removed before we address the remaining ones, and that is what this initial process does.

Stay tuned for the next part of this guide, it will be posted in a few days. Give yourself a pat on the back for making a commitment to better your credit.

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There are many unpleasant effects of having bad credit, all of them really suck. I wouldn’t wish them on anyone, and if you have bad credit then you likely know most of these, or maybe not. If you are wondering what the big deal is about bad credit, then read this list.

1. Sky high interest rates on credit cards, loans, and every other form  of credit

2. Getting turned down for a job that does background checks, and they are doing many credit checks these days to see if someone poses a theft risk.

3. Difficulty finding an apartment because of credit checks.

4. Marriage. Yup, I know it sounds weird but who wants to marry someone who has a horrible credit rating if they themselves do not? Nobody, of course. When you marry, your individual credit scores remain in tact, BUT any credit that you and your spouse apply for together (like a mortgage) will be negatively affected by the bad credit rating of the other spouse. Yes, it is the love that is important, but in reality, money will dictate your quality of life. I have heard of many couples staying engaged forever or at least until the one with bad credit fixes up their finances.

5. Cell phone. Prepaid sucks doesn’t it? Yes, it does. If you have a bad credit score then you can forget about getting a normal cell phone plan. They will either ask for a large security deposit, which they hold in case you default on the bill,  or just decline you outright. Then you have to deal with prepaid minutes and not being able to make a call at the one time you need to, yes it always happens that way. Anyone who tells you prepaid is the way to go probably has bad credit. Avoid this whole prepaid scene if you can.

6. Getting the lights and heat turned on. Yup, utility companies now routinely check your credit when you apply for new service. They may require you to put down a large security deposit just to turn your lights on. Nice, huh?

7. Car insurance. You will have higher premiums if your credit sucks, they check it when you apply. The amount might not be exorbitant, but it will be an amount nonetheless.  Every cent counts when you are dealing with living expenses, save wherever you can.

8. PHONE CALLS! Millions and millions, and millions, and millions of phone calls from debt collection agencies. Depending on what state you live in, these toe fungi call you from the minute you wake up to the minute you go to bed. They will find out where you work and then start calling there, and depending on where you work this may cause quite a scene. They want to embarrass you, they are the scum of the earth, and they figure that you will get so sick of calling that you’ll come down and either shoot them or pay the bill.

* Please, no comments about how the debt collectors are nice and just doing their job, and the person in the wrong is the deadbeat not paying their bills. True, you are to blame for not paying your bills, USUALLY. Sometimes though, circumstances prevent someone from working, such as an injury or illness. These people don’t need some 4th grade dropout telling then that they better pay up or else. They need a break, some compassion would be nice.

9. Education. Most kids don’t get full scholarships to go to college. They have to go the old fashioned route, and pay for it. Most kids don’t have twenty grand laying around, so they need to get a student loan. If you are the student and have bad credit, you will likely be declined. If you want a school loan for your own kid, then you will likely be declined if he requires a co-signer. That would really suck right? Yes, it would. Credit lenders are targeting young people, even teenagers, to acquire all forms of credit. They want to hook the kids while they’re young, and make them pay a lifetime of interest. Sad, very sad.

10. Quality of life. Because of all the nine previous items, and many others, your overall quality of life will suffer if your credit is poor. If you have bad credit now, make a commitment to yourself to map out an attack plan for improving your credit. The sooner you take that first step to being debt free, the quicker it will actually happen.

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