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TCarson
Posts: 68
Registered: ‎05-12-2007
0

Is this advice correct?

[ Edited ]

I just finished reading an article from bestcredit(dot)com about five ways to raise your FICO score an something seems wrong about their advice.

 

On step #3, is says to have your existing Credit Card limits increased, but it also says that in doing so the inquiry will not effect your FICO score.

 

From what I've always read here, I thought that these Hard Pulls will look the same as applying for a new credit and they will have an effect for at least 12 months.

 

Which is correct?

 

 

    From their web site: 

 

3) Have Credit Limits Raised

 

Contact your creditors and ask them to raise the limits on your accounts as much as possible.

Although they'll perform a credit check, such inquiries don't affect a credit score.

Account limits can usually be raised every six months, up to a cap determined by the issuing bank.

Most standard cards have a cap of $5,000, while platinum cards are often capped at $25,000.

Banks are more likely to raise credit limits for those with good credit, of course, and for those who report an increase in income.

Incidentally, they don't verify increases in income for existing customers.


Starting Score: 724
Current Score: 797 (EQ)
Goal Score: 800

Valued Contributor
IOBA
Posts: 2,659
Registered: ‎08-13-2009
0

Re: Is this advice correct?

My experience has been that if a company does a soft pull (which is what they typically do for a credit line increase) that I loose 5-10 points off of my FICO score.

 

My experience has been that if a company does a hard pull (which they SOMETIMES do for a credit line increase) that I loose 9-16 points off of my FICO score.

 

My FICO score is typically in the low 800's/borderline 800 -- depending on life and the volatile mood of the FICO algorithm.

 

You would take a hit for the credit inquiry (soft or hard), BUT may gain a few points with more available credit.   So big picture, it may be a wash as for a the score goes.

Established Contributor
shakalaka
Posts: 556
Registered: ‎09-10-2012
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Re: Is this advice correct?


IOBA wrote:

My experience has been that if a company does a soft pull (which is what they typically do for a credit line increase) that I loose 5-10 points off of my FICO score.

 

My experience has been that if a company does a hard pull (which they SOMETIMES do for a credit line increase) that I loose 9-16 points off of my FICO score.

 

My FICO score is typically in the low 800's/borderline 800 -- depending on life and the volatile mood of the FICO algorithm.

 

You would take a hit for the credit inquiry (soft or hard), BUT may gain a few points with more available credit.   So big picture, it may be a wash as for a the score goes.


Sorry, but you will not loose points for a soft pull. Or am I wrong here? Only on hard pulls.

 

If it is soft or hard depends on the bank, you may ask prior to requesting the pull. With an increase your score can go up, for your Util would go down. Of course this will only be the case if you do not PIF your cards before they report to the cra. Otherwise your Util will still be 0 of course.:smileyvery-happy:


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FICO: TU 770 (8/18) EQ 732 (8/8) EX 748 (12/5)

Mega Contributor
RobertEG
Posts: 17,456
Registered: ‎03-19-2007
0

Re: Is this advice correct?

[ Edited ]

The article is incorrect as a general principle.

A primary purpose for recording credit inquiries in a consumer credit file is that creditors consider recent apps for new or increased credit as a potential indicator of consumer risk.   FICO has reached the same conclusion based on their data showing a correlation between recent attempts to acquire new or increased credit and potential for increased risk of later repayment.

 

As such, in my opinion, any consumer-initiated request for new or increased credit should be shown in the consumer's credit report, or else the system is not doing as intended.

 

However, the reporting of inquiries is, except for inquiries solely to make promotional offers for credit, unregulated by the FCRA.  How inquires are stored and recorded is based entirely upon an administrative coding system developed by the CRAs.  That system is shrouded in mystery.  I have never seen an objective explantion of how it operates. 

 

What appears clear, at least to me, is that the basic distinction between a so-called "hard" and "soft" inquiries is whether or not the inquiry is included in consumer reports pulled by parties other than the consumer.  How that comes about depends upon how the CRAs code each inquiry, thus determining whether it is generally available for credit report review and for credit scoring.  Therein lies the mystery. 

 

There are clearly well-established types of inquiries that have specific codes that prevent view by others, and thus inclusion in credit scoring.  Notable examples are consumer pulls of their own report and creditor pulls for internal account reviews that are not associated with requests for new or increased credit on the part of the consumer.  Clearly "soft."

 

Then it gets real murky.  Take any consumer-initiated request for new or increased credit.  Normally intended to be coded such as to appear in the consumer's credit report and be included in scoring.  How in the world do such inquiries get coded in a manner that prevents that?  Do the CRAs have reporting codes that state "consumer-initiated request for new credit, but dont include in their credit report"?  That would appear, at least to me, to be a totally subjective matter, and contrary to the intent of recording such inquiries.  If the CRAs dont provide such subjective codes, then how do such inquiries that clearly qualify for CR inclusion get recorded in a manner that prevents that?  Does a creditor who promises to report only as a soft pull have to provide a fake coding to make that come about?  That is, do they provide a stated permissible purpose other than the real purpose?  Who produces the intended coding?  Do creditors have codes to report under, or do the CRAs generate the necessary code based on the stated permissible purpose provided by the inquiree?

 

I have never seen an authoritative answer to how that system works.  It would be helpful if someone has a source for explaining the coding process.

 

 

 

 


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