One of the most persistent myths regarding credit scoring is that consumers have to give explicit written permission each time a lender accesses their credit scores. To the contrary, the vast majority of scores are calculated without the consumer’s overt permission and, typically, without the consumer’s knowledge. And as long as the lender has what’s referred to as “permissible purpose,” they can pull your credit scores as often as they choose to do so.
The next time you review copies of your credit reports, for free at annualcreditreport.com or through any number of other outlets, look at the section that contains credit inquiries. The inquiries are a record of who pulled your credit reports and on what date. You’ll likely notice a fairly long list of inquiries under the category of “Account Management” or “Account Maintenance”, which are essentially the same thing.
Account Management inquiries occur as part of periodic reviews of your credit report and credit score by lenders with whom you have existing relationships. The vast majority of time, those lenders are your credit card issuers. Many large card issuers review credit reports and credit scores monthly as part of industry-standard “best practices” for assessing the credit quality of their loan portfolios. Doing so protects lenders from loss, and can help at-risk consumers avoid getting too much further into debt.
Credit card issuers are among the most “at-risk” lenders because the credit they extend you is not collateralized, or secured by a physical asset, such as a car or a home. That means if you default on your credit card obligation, the issuer may not be able to recover anything.
Because of the high-risk nature of their business, credit card companies want to know constantly whether or not their customers are continuing to pay their other bills on time and maintaining acceptable credit scores. If issuers see that your scores have dropped, in order to protect themselves, they can lower your credit limits, increase the interest rates they charge you for new purchases (after 45 days notice), or even close your account.
One final note: Inquiries generated through the Account Management process are not seen by credit scoring models and, therefore, cannot have any adverse impact on your credit scores.