Looking for clarification on Hard vs Soft inquiries. In the generalist terms all I know is that If you authorize someone to pull credit and they do, that's pulled as a "hard" and if it's advertisers etc. that are looking for clients then a "soft" is pulled. If I'm understanding some of the posts I'm reading on this board, I'm incorrect. That creditors are pulling "hard" scores without us even knowing? On 2 occasions I've sent info to the credit bureau disputing the inquiry and they have dropped in 30-60 days. 2ndly - Can someone clarify how agency's report their points up and down. I read a poster was upset with MBNA as they reported point changes as his balances increased, though his pay was fine. and another poster disliked citi card because they were slower to report the paydowns etc. Not really understanding the process. Along this same line, if you significantly paid down a line, can you call the card and request they report such? Or is that a mute point? What's the difference in Fico, Beacon and ???? (one other score I forgot). I called my lender at WAMU yesterday to ask her what my score was when I pulled a 2nd a couple months ago. She asked me If I wanted my Fico, the Beacon (is that the middle?) and this one other? Finally - I've played the game of juggling balances from card to card for 5-6 years now and feel I'm successful at it, as I've never paid more than 5.9% when rates were up and I've kept all at 0 for 2 years now. Again, thought this was excellent, but in reading I'm hearing that this may be affecting my score? (scenario - 34 with 5 lines juggling, total of 125,000 available, Fico 750). Thoughts, suggestions??? Tina
Let me take a stab at this. (1) Hard Inquiry = When you apply for credit, giving permissible purpose for a creditor to view your entire credit report. Affects FICO points (2) Account Review Inquiry = When your existing creditors review your entire credit report, periodically. The existing relationship is a permissible purpose. Does not affect FICO (3) Promotional Inquiry = When creditors receive only cursory information such as your name, address, phone number, etc. with the purpose of offering you credit. The entire CR is NOT pulled. Does not affect FICO either. (4) Disclosures = When *YOU* pull your own credit report, with or without accompanying FICO scores. Then entire CR is pulled. Does not affect FICO. The term "soft" inquiry is defined by exclusion, that is anything that is not a "hard" inquiry is soft. Soft inquiries do not affect FICO. (2), (3), (4) all can be called soft inquiries. FCRA gives an existing creditor permissible purpose to review your credit record. It is also generally spelt out in the card agreements. Now, the creditor can do it two ways -- hard, or soft (Account Review). The threads that you refer to above are telling us that some creditors are choosing the wrong option, costing them FICO points, when there was no need to. Unfortunately, there is nothing in the law that prevents them from doing so, and the only recourse is a goodwill letter with the creditor that may or may not help. Collection agencies are another species with FCRA's permissible purpose to review your entire credit report (hard inquiry) without your permission or knowledge. FICO algorithm places heavy emphasis on the "utilization ratio", namely the ratio of your debt to the total credit limit. It places emphasis on the utilization ratio of a single account, as well as the overall ratio -- total debt/total CL. If either of these ratios exceed 50%, it can tank your score. Approximately 35% of weightage is given to this aspect of FICO, per its website. What the first poster you refer to was saying is that, even though he paid the balance down, MBNA is reporting that the balance increased .... so on his MBNA card, the utilization ratio increased ... and so his scores tanked. What the second poster is saying is that, while Citi is quick to report an increased balance to CRAs (increase in utilization = FICO decrease, immediate effect), they take up to 2 months to report a decreased balance ...(decrease in utilization = FICO increase, delayed). FICO is a proprietary algorithm, developed by Fair, Isaac and company. They license it out to the major CRAs ... FICO is independent of CRAs. Beacon = Experian's algorithm to compute credit scores, may include almost all features of FICO, but it is not quite "the real McCoy" ... so to speak FAKO = TransUnion's proprietary score.. same comments as above Equifax reports only true FICO, they don't have their proprietary algorithm I asked this question in an unrelated thread from a different poster... what's your real goal, what are you really after? If it is to have the maximum FICO possible, it is best to keep utilization on any single card to less than 30% of its credit limit (which in turn also makes the total utilization ratio less than 30%). Which may mean that you would need to transfer balances from a card with lower APR to one with an higher APR. You may want to do this, if you are planning on a mortgage in the near future, where the FICO score influences heavily the rate you are going to get If your goal, on the other hand, is to make the most prudent financial decision that's appropriate for your case (say for example, your goal is to pay the lowest interest possible) ... then screw FICO, go on with your life and be happy with your decision. Yes your FICO may take a ding, but don't let FICO govern you. As PsychDoc said in another thread, FICO only reflects your worth in a lenders opinion; don't let your life be governed with what others think of you. Best of luck. -- lakpr
Thank you for the clarification. Any suggestions on the note about who offers a service where one could continually check their fico? Without the $8-12 charge with each occurence?
Re: Re: Clarification of Hard vs Soft inq I think you are talking about Privacy Guard. Do a search on google for this term. Best of luck. -- lakpr
