If hard & soft pulls give same info, then why have hard pulls??

[Anonymous]

I have never been able to wrap my head around hard/soft pulls.. what is the point of having hard pulls, if a creditor can see the same info on a soft pull??? Why would a creditor ding you with a hard pull? Just for the spite of it??

[haulingthescoreup]

Seems like it sometimes, but actually, one of the factors that goes into determining your credit risk is whether you've recently been seeking credit, because this might indicate that you're in financial trouble, and you're frantically trying to line up a bunch of safety net accounts, which you might not be ale to pay off. Alternatively it might mean that you're impulsive and undisciplined, which can also be ominous for future repayment. So lenders who participate in credit bureau reporting agree to note when you've been seeking credit.

I sort of agree with the theory, but I think they need to look again at how they score it. Americans use credit very differently than we did 20 or even 10 years ago, so I think that a lot of the guidelines make us look riskier than we really are.

[RobertEG]

Creditors cannot see the same information with a soft pull as they can get with a hard pull. When, for example, a creditor pulls a promotional (scored as a PRM) soft inquiring to assess an offer of credit that was unsolitcited, only your name and address can be given to the creditor under the FCRA. 

They do not get your full CR.

A creditor cannot "decide" to ding you with a hard pull.  A hard pull can only be made if authorized by the consumer to pursue new credit, or expand existing credit (e.g, a CLI request).

Message Edited by RobertEG on 05-21-2008 07:44 PM

[smallfry]

Due to incessant pulling by insurance companies and other entities who really expose themselves to no proven risk I think inquiries like that should not be coded as inquiries for new credit. Your score should not be dinged for such nonsense and these types of inquiries belong in a different category.

[RobertEG]

Section 604 of the FCRA specifically stipulates that any inquiry not authorized by the consumer, be it related to an insurance or credit transaction, limits the inquiree to only the name and address of the consumer.  Section 604 also stipulates that any inquiry not initiated by consumer action must be reported to the consumer, and thus the CRA must record it in your credit file.  Soft pulls are mandated by law to show in your CR, but cannot count against your credit rating. They are in a different category.

The reason for and distinction between hard and soft pullls is for consumer protection.

Message Edited by RobertEG on 05-21-2008 08:16 PM

[Anonymous]

Robert-

So you're saying that a soft pull only shows your name and address?? That doesn't make any sense to me - some members here have received CCs and CLIs and the like with only a soft pull.. how could they receive credit when the creditor only pulled their name and address?

Also, that means that all these people that get "PREAPPROVED***" offers in the mail and get excited, are really not preapproved for crap.. (which is what I have suspected anyway, lol).. the only thing that got "approved" was that their mailing address was within whatever mailing area the company was targeting??

[RobertEG]

That is exactly what it means.  If you read the fine print on ANY "pre-approved" offer, you will always see that it is subject to their review of your CR, which requries you to respond and give authorization to pull your CR.  They are basically marketing ploys to gain your approval for a hard pull.  Period.

They are not an "approval.'  Of all practices currently being foisted upon consumers by CCCs, this is one of the most abusive and misleading.  Most consumers give no heed to the "pre-" modifier of "approval."

The FCRA is the law, but they try to circumvent it without vilolating it.  They cannot pull your full CR without your specific approval. Their offer is a fishing expedition to gain your approval for a hard pull.  Pure and simple.

Message Edited by RobertEG on 05-21-2008 08:53 PM

[haulingthescoreup]

There are multiple types of soft pulls. The ones that are limited in scope are those with the -PRM prefix used for promotional purposes, where lenders and insurers go out trolling for new customers. They have the basic demographics, including your name and address so that they can mail you junk, and the CRA's pull them from the parameters set by the lenders. So for instance, EX between 660 and 720, no BK's, no more than one collection. (I completely picked those out of the air, BTW.)

But once you have an account with a lender, they can pull a much more detailed report using the -AR or -AM prefices. This is where they find out that you've maxed out your other cards, or you just picked up a late on your mortgage, or your CL's are much higher with everyone else.

This is part of my list of softs on EQ:

AR-FIRST TENNESSEE BANK VISA 02/14/08
PRM-BANK OF AMERICA 04/02/08
PRM ONL-Bank of America 02/14/08, 12/06/07
PRM-CAPITAL ONE 02/08/08, 01/11/08
PRM-CAPITAL ONE - RTPM 02/08/08, 01/11/08
CIC/EXPERIAN ALRTS 04/05/08
CIC/EXPERIAN RPTS 04/04/08
AR-CITI SD- THE HOME DEPOT 04/25/08

Naughty First Tennessee, that account's been closed for several years, and I'm making a little list of the times that they softed me with an -AR prefix. That PRM ONL appears to be from the pre-approval site on Bank of America. Cap One appears to have given up on me, thank goodness. The CIC/Experian softs are from my own credit report monitoring. And there's Citi/Home Depot checking up on me.

Here's EQ's list of the prefices used for soft pulls and when they're used+:

PRM - Inquiries with this prefix indicate that only your name and address were given to a credit grantor so they can provide you a firm offer of credit or insurance. (PRM inquiries remain for twelve months.)

AM or AR - Inquiries with these prefixes indicate a periodic review of your credit history by one of your creditors. (AM and AR inquiries remain for twelve months.)

EMPL - Inquiries with this prefix indicate an employment inquiry. (EMPL inquiries remain for 24 months)

Equifax or EFX - Inquiries with these prefixes indicate Equifax’s activity in response to your contact with us for a copy of your credit file or a research request.

ND - Inquiries with this prefix are general inquiries that do not display to credit grantors. (ND inquiries remain for twelve months.)

ND MR - Inquiries with this prefix indicate the reissue of a mortgage credit report containing information from your Equifax credit file to another company in connection with a mortgage loan. (ND MR inquiries remain for 24 months.)

PR - Inquiries with this prefix indicate that a creditor reviewed your account as part of a portfolio they are purchasing. (PR inquiries remain for 12 months.)