Hard Inquiries and Soft Inquiries

 

 

Content from www.creditkarma.com

 

 

There are two kinds of inquiries that can occur on your credit report: hard inquiries and soft inquiries. While both types of credit inquiries enable a third party, such as you or a lender, to view your credit report, only hard inquiries can negatively affect your credit score.

What is a hard inquiry?

Hard inquiries generally occur when a financial institution, such as a lender or credit card issuer, checks your credit report when making a lending decision. They commonly take place when you apply for a loan, credit card or mortgage, and you typically have to authorize them.

Hard inquiries could lower your credit score by a few points and may remain on your credit report for two years. Fortunately, as time passes, the damage to your credit score usually decreases or disappears, often even before the hard inquiry falls off your credit report.

 

What is a soft inquiry?

Soft inquiries typically occur when a person or company checks your credit report as part of a background check. Examples include employer background checks, getting pre-approved for credit card offers and checking your own credit score. Unlike hard inquiries, a soft inquiry may occur without your permission. However, they won’t affect your credit score. Soft inquiries may or may not be recorded in your credit report, depending on the credit bureau.

One of the biggest credit misconceptions is that checking your own credit score using companies like Credit Karma will hurt your credit score. This is not the case. You can check your credit scores at Credit Karma as often as you like without affecting your credit score.

Examples of Hard Versus Soft Inquiries

Trying to figure out what type of inquiry will be placed on your report? Here’s a general guide.

Hard Inquiries
Usually

  • Applying for an auto loan, student loan, business loan or personal loan
  • Applying for a credit card
  • Applying for a mortgage

Sometimes

  • Applying to rent an apartment
  • Verification of identity by a financial institution, such as a credit union or stock brokerage
  • Renting a car
  • Getting a cable or Internet account
  • Opening a checking, savings or money market account
  • Requesting a credit limit increase
  • Getting a cell phone contract
Soft Inquiries
Usually

  • Checking your own credit score
  • Pre-approved credit card and loan offers
  • Background check, such as those done by employers

Sometimes

  • Applying to rent an apartment
  • Verification of identity by a financial institution, such as a credit union or stock brokerage
  • Renting a car
  • Getting a cable or Internet account
  • Opening a checking, savings or money market account

If you’re unsure of whether a financial action you’re about to take will result in a credit inquiry, ask the financial institution or company. And if a financial institution or company informs you that they will be checking your credit, ask them to distinguish whether or not it is a hard or soft inquiry.

Why Hard Inquiries Hurt Your Credit Score

While hard inquiries are necessary for certain financial actions, such as applying for a loan or credit card, they should be limited as much as possible. Your credit score may be penalized for multiple hard inquiries because applying for too much credit at one time may indicate that you’re desperate for credit or aren’t able to qualify for the credit you need. While one hard inquiry will usually just knock a few points off your credit score (if any), multiple hard inquiries in a short amount of time may cause significant damage to your score.

Keep your hard inquiries to one or two a year if you can. Credit Karma data shows that on average, consumers with lower numbers of hard credit inquiries have higher credit scores.

How to Dispute Hard Credit Inquiries

If a hard inquiry occurred without your permission, check your credit reports to see the full details of the inquiry and determine if you should attempt to dispute it.

Note that you can only dispute hard inquiries that have occurred without your permission. If you’ve authorized the hard inquiries, it generally takes up to two years for them to fall off your report.

Conclusion

Before applying for credit, take time to build your credit score. With a higher credit score, you may improve your chances of being approved for the financial products you want at the best terms and rates.

To keep track of hard inquiries, check your credit scores and credit reports at Credit Karma. In addition to providing you with your free credit scores from TransUnion and Equifax, Credit Karma can notify you of any important changes to your TransUnion credit report, including any new hard inquiries.

7 Credit Score Lies You Shouldn’t Believe

Information found at www.cheatsheet.com

How much do you really know about credit scores? Though your credit score affects everything from your ability to rent an apartment to how much you’ll pay every month on your car loan, many people aren’t sure how scores are calculated, don’t know what the scores are used for, and believe common credit score lies and myths that cause them to make dumb money decisions. So what’s the truth behind this all-important number?

“Your credit score plays a pivotal role in your financial journey. As far as numbers go, it’s one of the most important that will ever be attached to your name,” Julie Pukas, head of U.S. bankcard and merchant services at TD Bank, told The Cheat Sheet.

The majority of people understand that mortgage lenders and credit card companies use credit scores when making lending decisions, a recent survey by the Consumer Federation of America (CFA) and VantageScore found. Most also know that declaring bankruptcy or making late payments will hurt your score. But beyond those basics, misinformation and credit score lies abound. Only 25% of people surveyed by the CFA were aware that a low credit score could increase the cost of a car loan by $5,000, and more than half didn’t realize landlords, utility companies, cellphone companies, and insurers sometimes check credit scores.

“Many people scorn credit, but the simple fact of the matter is that in most situations, your credit score is a deciding factor in whether you’ll be approved for a mortgage, car loan, credit card, or another type of loan,” Pukas said. “If you’re looking for an apartment, your score may impact your probability of getting approved, the size of your security deposit, and how much you pay in fees. It can also impact how much you pay for home and auto insurance and might even decide whether you’re approved for a new cell phone plan.”

Being misinformed about credit scores or believing credit score myths can have serious financial consequences, whether you’re a borrower or not. You can boost your credit savvy by familiarizing yourself with the truth behind these seven big credit score lies.

Continue reading “7 Credit Score Lies You Shouldn’t Believe”

Unsecured Loans vs. Secured

There are two basic categories that most loan types fall into – Unsecured and Secured.

Unsecured Loan

On the other hand, unsecured loans are the opposite of secured loans and include things like credit card purchases, education loans, or personal (signature) loans. Lenders take more of a risk by making such a loan, with no property or assets to recover in case of default, which is why the interest rates are considerably higher. If you have been turned down for unsecured credit, you may still be able to obtain secured loans, as long as you have something of value or if the purchase you wish to make can be used as collateral.

When you apply for a loan that is unsecured, the lender believes that you can repay the loan on the basis of your financial resources. You will be judged based on the five (5) C’s of credit — character, capacity, capital, collateral, and conditions – these are all criteria used to assess a borrower’s creditworthiness. Character, capacity, capital, and collateral refer to the borrower’s willingness and ability to repay the debt. Conditions include the borrower’s situation as well as general economic factors. Continue reading “Unsecured Loans vs. Secured”

5 Reasons Why Good Credit Matters

Society is becoming increasingly dependent on using credit to make purchases and decisions. These days, good credit is used for more than just getting a credit card or a loan. More and more businesses are making the case that you must have good credit before they extend products or services to you.

It Affects Where You Live and How Much You Pay

Before you can buy a house, mortgage lenders want to know that you won’t default on your mortgage.

If you don’t have good credit, the lender will consider it risky to give you a mortgage loan. If you’re approved for a mortgage your credit affects your interest rate which directly impacts your monthly mortgage payment. Bad credit could mean a higher mortgage payment. Worse than that, your mortgage application could be turned down because of your bad credit.

Continue reading “5 Reasons Why Good Credit Matters”

Fixing Your Credit

Got bad credit? You’re not alone. According to a breakdown of credit bureau Experian’s 2015 VantageScore 3.0 data, close to one-third of Americans have a credit score lower than 601 — and, yeah, that’s not so hot. Finding out you’re in that lowest credit echelon often comes at the worst time. You’ve just applied for a credit card, a car loan, a mortgage or even an apartment, and you were rejected. Along with the dream-crushing news comes a letter that spells out the reasons you weren’t approved. It may say things like “Too few installment accounts” or “No recent revolving account activity.” And even though they’ve given you reasons why your credit isn’t good enough to be approved, you’re still lost on how to actually fix your credit.

Time for a Credit Repair? Continue reading “Fixing Your Credit”

Fraud Alert

Nobody likes to have their security compromised even more so to have one’s identity stolen. As much as we want to be exempted from identity theft, there is just no guarantee that we won’t be targeted by those culprits. This doesn’t mean that you should take the security of your identity lightly; on the contrary, you have to be even more alert and vigilant.

If a time will come that you think you may fall prey to credit card fraud or identity theft, don’t hesitate to take the necessary actions to prevent it from happening. For example, if you have lost your wallet with your credit cards and social security card in it, don’t delay in contacting your creditor and have the card cancelled. Then immediately have a fraud alert placed on your credit report to help prevent a possible identity theft.

Fraud Alert

The name itself explains it; fraud alert basically notifies businesses or anyone who would pull up your credit report that your information has been compromised. The entities that have pulled up your credit report would then have to take extra measures in verifying that the person applying for a loan or a credit card is indeed you.

Placing a fraud alert on your credit report is free and you can do it on your own. So there shouldn’t be a reason for you not to activate this feature, if your personal information gets compromised. Continue reading “Fraud Alert”

Who Can View My Credit Report?

Your credit report contains all sorts of personal information: your address, employment history, social security number, etc. This report also bears the summary of your credit history, your account numbers, and overdue accounts.  If you have accounts that were turned over to credit agencies, these will also show in your credit report.

All this information is very useful to organizations, as they can determine if you are eligible to acquire their services. Continental Finance will access your credit report to decide which credit tier would suit you best. Many credit card companies are quick to reject applicants based on a negative credit report. However, Continental Finance takes time to thoroughly review the applicant’s history to ensure fair treatment with the goal of giving consumers the opportunity to rebuild their credit score.

It’s not just financial that will need access to your credit report. Employers may require a credit history screening. If you are looking to rent an apartment or house, many landlords will check your credit report to determine if you will pay in a timely manner. Basically, most organizations that you have initiated business with will probably need to check your credit report to determine your eligibility.

You should also know, many lenders and merchants purchase memberships to credit bureaus for fast and easy access to customers’ credit history. However, credit bureau members have a contract limiting their usage; they are only allowed access when they are considering persons for employment, extensions of credit, or other legitimate business reasons.

If you’re now worried about the safety of your credit report information, you shouldn’t be. There is a law established that protects your credit report information. The Fair Credit Reporting Act (FCRA) specifies who are allowed to access your credit report and why. This act states that a company/individual must have a legitimate reason to view your credit report. Any organization or individual who acquires a copy of your credit report under false pretenses can be fined and jailed for up to a year.

Getting a Copy of Your Credit Report

Since the 1970’s, credit scores have played an increasingly vital role in the lending industry.  These scores are now reviewed not only by prospective lenders, but also by landlords, insurers and government agencies. There are two scoring models that are mainly used.  Below shows the importance of each category in calculating the credit score.

FICO Score

  • The Consumer’s Payment History: 35%
  • Total Amounts Owed by the Consumer: 30%
  • Length of the Consumer’s Credit History: 15%
  • Types of Credit Used by the Consumer: 10%
  • Amount of the Consumer’s New Credit: 10%

VantageScore

  • Amount of the Consumer’s Recent Credit: 30%
  • The Consumer’s Payment History: 28%
  • Utilization of the Consumer’s Current Credit: 23%
  • Size of the Consumer’s Account Balances: 9%
  • Depth of the Consumer’s Credit: 9%
  • Amount of the Consumer’s Available Credit: 1%

If you are in the process of rebuilding your credit score, you should know that these reports are the sole source of information for your credit score. Thus, it is important that the information included is positive and accurate. Continental Finance reports to the 3 major credit bureaus: Equifax, Experian, and TransUnion on a monthly basis.

It is imperative that you have access to these reports so you can be aware of your financial status. Your credit reports can help you analyze your credit standing, make you aware of fraudulent activities, and function as your “resume” when applying for loans, credit cards, etc. Banks, financing firms, or lenders will use your credit report to make decisions.

You can always access your credit report for free by logging in to www.annualcreditreport.com.

The Reflex MasterCard®

Do you make two trips to the grocery store just because you didn’t have
enough cash during your first visit? Are you tired of always looking for a working ATM before you make any purchase? Can’t keep track of your finances because you keep losing your receipts? Then it may be time for you to get yourself a credit card.

We are certain that you’re aware of how convenient and helpful it is to have a credit card. You may have previously thought of getting a credit card again, but just got tired of financial firms denying your requests for credit.

Continental Finance believes in second chances; that is why we give more focus to people that are neglected by other firms. In fact, Continental Finance has created several cards that may meet the needs of these consumers; one being The Reflex MasterCard®.

The Reflex MasterCard is designed for people with less than perfect credit.  If you make on-time minimum payments and maintain your balances under your credit limits, you may be able to build, rebuild, or reestablish your credit!

If you have financial challenges or are trying to improve your credit score, using a credit card responsibly can help.  The Reflex MasterCard will report you payment activity monthly to the three major credit bureaus.  Debit card use doesn’t appear anywhere on your credit report; therefore, it can’t help you build or improve your credit.

Add The Reflex MasterCard to your financial plan: get yourself a Reflex MasterCard today!  Click here to Apply Now!

Building your Credit Score and Managing your Finances

Credit cards are a great way to build your credit score and credit history. They also help you streamline most of your daily expenses into just one billing, so you can keep track of your monthly purchases and enable you to better manage your finances.

How to build, repair, and manage your credit score can be summed up in these 3 keywords: Know, Pay, and Control. These are the keys that Continental Finance fortified over the years and have helped many of our customers reach their desired result.

“Knowing” is always the first step in most, if not all, aspects of life that can be managed; thus, it is imperative that you are aware of all the on-goings of your account, such as your billing statement, recent transactions, payment history, and more. This is where the Online Banking Service comes in, and Continental Finance has made sure this is a free service provided as a feature of our credit cards.

Now that you know, it is time to make sure payments are made and are received on time to avoid those unwanted penalty charges. Late payment fees or charges are among the main detractors in building and maintaining your credit score. The Online Banking Service of Continental Finance also allows customers to pay their bill online, a proven faster and safer method.

Last and most certainly not the least, controlling what you spend is crucial. A lot of cardholders fall into this trap where they spend more than they can manage. Thus, Continental Finance always makes sure their customers do not fall victim to this by initially allocating a credit limit they can handle. Credit limits can be increased in time when customers have proven that they are able to manage their respective credit tier.

Managing your account online is safe, secure, and fast.  There are several ways in which you can manage your account online; such as,

  • Signup for electronic statement delivery
  • View electronic statements and account summary information
  • Make payments online
  • View available credit
  • Create reports that help track expenses

The Online Banking Service is available 24 hours a day so you can access and manage your account whenever it is convenient for you.