DEFINITION of 'Account Inquiry'

An account inquiry is a review of any type of account, whether it be a depository account or credit account. The inquiry can refer to past records, payments or other specific transactions, or any other entries relating to the account.

BREAKING DOWN 'Account Inquiry'

Most financial institutions have a formal department that deals with account inquiries. Sometimes the term is used when there is a request to or from a credit agency about a particular consumer.

An account inquiry could be done per the request of a bank, lender, or other financial institution that requires a copy of an account history when an individual, business, or other entity applies for credit or a loan. Credit agencies may issue account inquiries to credit card companies or other lenders as part of assessing whether they are current on the bills they are responsible for.

Why Account Inquiries Are Performed

Account inquiry may typically be initiated when an individual seeks to take on new debt, particularly in conjunction with making a substantial purchase such as the acquisition of real estate. Before the individual us approved for the new debt, the lender wants to see the track record of the applicant when it comes to paying their debts in an orderly fashion. This is a step in assessing the overall creditworthiness of a potential borrower, as well as structuring the rates they may be offered for the loan they are seeking.

An account holder may initiate an account inquiry themselves, particularly if questionable activity is suspected. For instance, if there are debits that the account holder does not recall authorizing, an inquiry can provide answers to where the charges originate from. This could be a step in identifying security breaches or instances of fraud by bringing to attention to transactions that are not familiar. The account holder could request that bank or creditor launch an investigation into such transactions.

Account inquiries might also be made to ensure that payments that are owed have cleared and were delivered on time.

Excessive account inquiries by third parties, particularly for credit cards, may have an adverse effect on the credit rating of an individual. If an individual applies for multiple credit cards in a short period of time, each application will usually trigger an account inquiry into their payment history.

When those inquiries are reported to credit agencies, it may be regarded as a form of high risk and a cause to lower the consumer’s credit score.

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