Many times, I talk to people who ask why multiple credit checks are being done on their credit report without their knowledge. In many cases, the customer is shopping for a new car or thinking about buying a home. Sometimes this can even happen without the person’s permission.
Let’s say you’ve starting the house hunt, and have looked at several houses but haven’t found the right one. In the meantime, your real estate agency could have run a credit check on you, as well as the mortgage company you talked to about being pre-qualified for a loan.
Each credit check on your record can drop your score by about five points, and they’ll stay on your record for six months. If multiple credit checks are made in a short period of time, they will cause quite a dent, albeit temporary, on your credit score.
The surprising part is these credit checks can be done even if you merely express interest in a car loan or home mortgage. What you may not realize is that by asking for a quote, you are authorizing your credit report to be pulled. A Social Security number is not needed for the inquiry; your name and home address is enough. So if you’re going to several dealerships or work with several real estate agents, your credit history will rack up a list of requests.
So if you are car shopping or house hunting, do your research first. Determine what kind of car you want or what home type and neighborhood, then figure out which car dealer or real estate agent you want to work with to complete the transaction. By working with just one entity, you’ll significantly lower the number of credit inquiries. Or if you do want to shop around, be blunt: Tell the car dealer or realtor not to check your credit without your express permission.