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What Is an Account Inquiry?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 18 November 2016
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    2003-2016
    Conjecture Corporation
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An account inquiry is a request for information related to a specific account, often for the purpose of evaluating the extension of a loan or some type of credit privileges. Financial institutions such as banks, loan companies, and credit card companies often log this type of query when renewing a customer’s account or evaluating an application for some type of new credit. The idea behind an account inquiry is to ascertain if the customer presents a level of risk to the lender or creditor, based on how that customer manages the already established financial accounts.

When presenting an account query, the issuer may request information on credit accounts, depository accounts, and even other financial accounts held by the applicant at the same institution. Along with requesting information from credit reporting agencies, this type of inquiry can provide valuable insights into past history that may include clues regarding closed accounts, any lingering issues with current accounts, and what type of additional credit or loan amount that the applicant can reasonably be expected to manage without a strong potential for default.

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One of the benefits of conducting an account inquiry is that lenders and creditors have the opportunity to protect themselves from extending resources to someone who is highly unlikely to be able to repay the debt according to terms. For example, if an inquiry to a bank yields information that indicates the account holder is overdrawn on a regular basis, this may serve as a warning sign that the applicant has difficulty managing money. High balances on existing loans, especially when compared to data collected regarding income levels, will often also indicate that extending additional credit or loans may be not be in the best interests of the lender. By filtering out and rejecting applicants who present a significant risk to the lender, the interests of other customers are protected, and the chances of the lender incurring significant losses is kept to a minimum.

Conversely, the results of an account inquiry may actually hasten the approval for a new credit card or loan. When the applicant’s handling of the account demonstrates fiscal responsibility and sound financial judgment, the risk to the lender is often well within acceptable limits. Under these circumstances, the lender may consider the findings from the account inquiry to be sufficient grounds to approve the application and extend the credit or loan to the applicant, often with superior interest rates and terms.

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