topic Re: A question about inquires in Understanding FICO® Scoring

A question about inquires

Remedios — Tue, 06 Feb 2018 14:24:57 GMT

It's my understanding that soft pull and hard pull contain nearly identical data,so my question is whether credit card companies code inquiry as hard in order to serve as a warning shot to other creditors that an individual is seeking credit .
I Googled my little heat out trying to find an image of what either one looks like and came up empty.
I am curious about the rationale behind it, because many issuers will do CLI based on soft pull, but that in essence is also credit seeking, except without a scoring ding.

Re: A question about inquires

Anonymous — Tue, 06 Feb 2018 14:30:54 GMT

A SP and HP contains the same data, just that the HP remains present for 2 years making it known that you were seeking additional credit. As you stated above, additional credit could be in the form of a new account, or greater credit on an existing account.

You are correct that some creditors will do SP CLIs. It's all very creditor-specific and those that give them with a SP simply don't feel that the additional credit being given is significant enough to constitute a HP. There are creditors out there though that will only give you $500 (or even nothing) with a HP request.

You mentioned a scoring ding with taking on a HP. It's important to understand that this isn't always the case, as people often can take a HP and see no scoring ding at all. It all depends on how many other inquiries are present at the time.

Re: A question about inquires

Remedios — Tue, 06 Feb 2018 14:36:55 GMT

Thanks, BBS. That makes a lot sense.
As a professional data cruncher, I find it all quite fascinating

Re: A question about inquires

Anonymous — Tue, 06 Feb 2018 14:58:58 GMT

As do I, which is probably why I spend so much time on this forum

Re: A question about inquires

HeavenOhio — Tue, 06 Feb 2018 17:25:49 GMT

My guess is that some lenders treat CLI requests as seeking new credit, which is a hard pull. Others do them on the basis of account reviews, which are soft pulls.

Re: A question about inquires

Anonymous — Tue, 06 Feb 2018 19:02:06 GMT

And many of them like Citi for example will do them as a SP or HP depending on the circumstances, so it's always good to know which it will be before making an attempt.

Re: A question about inquires

Anonymous — Tue, 06 Feb 2018 21:20:27 GMT

We had a long thread a year or two ago in which I asked why a particular creditor would do hard pulls at all, given that typically the creditor has something to gain by not making his customer angry. How does it help that particular creditor in that instance to aggravate his current or potential customer by doing the hard pull -- when he can get the same info by doing the soft pull?

What most people would say is that the hard pull helps alert other creditors -- but that in a way intensifies the puzzle rather than resolving it. Why would Bank of America want to help out Chase? Again, we tended to hear as a response, "yeah but if everybody thought that way, then we wouldn't find out about any credit apps" which doesn't address the almost Darwinian importance of the event as it occurs in time. If you give people the option to pay taxes, then we should expect that almost no particular individual would pay, even though we can show that if everybody thinks that way it will cause our nation to collapse. Likewise, since individual creditors have an option to do a soft pull, their decision for each pull should be dominated by the desire not to offend a current or potential customer.

I had originally guessed at the time that there must be some kind of federal or CRA guidance that forced creditors to do hard pulls for all new accounts, but that turned out not to be true, if I remember right. No one is forcing creditors to do hard pulls, but they all somehow do them anyway (except for CLIs, credit union memberships, and SS loans, about which there is a wide diversity of practice -- again with no discernable pattern or rationale).

All interesting stuff to be sure.

Re: A question about inquires

Kree — Tue, 06 Feb 2018 21:26:21 GMT

I get lots of junk mail, including personal loan offers. "Get pre-qualified with a soft-pull" they say. And it is true, they will give your rates with a soft.

But, they will all do a hardpull right after you submit your application, and right before they accept it. There must be something different in the information. I'm thinking, disputed tradelines will often disappear from your record during disputes. What if HPs can see the tradeline? it isn't scored in, but it is there to see.

Or maybe HPs secretly reveal hidden notes about customers. "this Kree guy is a jerk." Something, there has to be something.

Re: A question about inquires

Anonymous — Tue, 06 Feb 2018 21:57:27 GMT

Hi Kree. Certain kinds of soft pulls do indeed have much more limited information. CC issuers (for example) can go to a CRA and ask it to give the issuer a list of people who's credit data meets certain criteria. That could be whatever the CC company wants: low utilization, few inquiries, no derogs, anything. Then the CRA gives the CC issuer a bunch of names and addresses -- which in turn will likely lead to all these people getting a "pre-approval" offer in the mail.

When this happens, all the CC company gets from the CRA are the names of the people who met the criteria, but no listing of each person's accounts. Nonetheless, the CRA is obligated to classify that as a "soft pull" of one's credit.

So yes, some soft pulls (i.e. the ones for promotional purposes) are far more limited. But if a CC company does a soft pull in response to you asking for a CLI, then they get to see your entire report (except of course for the listing of soft pulls, which no creditor can ever see).

Re: A question about inquires

Remedios — Tue, 06 Feb 2018 23:12:37 GMT

What prompted me to ask is Discover's recent tendency to do approvals without a hard pull, but also decline without a hard pull. For a consumer, that's really a win win situation.

Re: A question about inquires

Anonymous — Wed, 07 Feb 2018 01:52:39 GMT

We had a long thread a year or two ago in which I asked why a particular creditor would do hard pulls at all, given that typically the creditor has something to gain by not making his customer angry. How does it help that particular creditor in that instance to aggravate his current or potential customer by doing the hard pull -- when he can get the same info by doing the soft pull?

What most people would say is that the hard pull helps alert other creditors -- but that in a way intensifies the puzzle rather than resolving it. Why would Bank of America want to help out Chase? Again, we tended to hear as a response, "yeah but if everybody thought that way, then we wouldn't find out about any credit apps" which doesn't address the almost Darwinian importance of the event as it occurs in time. If you give people the option to pay taxes, then we should expect that almost no particular individual would pay, even though we can show that if everybody thinks that way it will cause our nation to collapse. Likewise, since individual creditors have an option to do a soft pull, their decision for each pull should be dominated by the desire not to offend a current or potential customer.

I had originally guessed at the time that there must be some kind of federal or CRA guidance that forced creditors to do hard pulls for all new accounts, but that turned out not to be true, if I remember right. No one is forcing creditors to do hard pulls, but they all somehow do them anyway (except for CLIs, credit union memberships, and SS loans, about which there is a wide diversity of practice -- again with no discernable pattern or rationale).

All interesting stuff to be sure.

Hey there CGID! I tend to think of it sort of as a system of checks and balances. Yes one lender may be "helping" out others by giving their own potential customer a HP, but in turn by doing so the expectation is that those other lenders that they're "helping" will return the favor; They will then administer HPs for apps to their institution. Rather than everyone be blind to whether or not an individual has been seeking credit, I think the consensus would be that it's a better thing to be in the know rather than not. Since it's more or less an expectation to receive a HP for seeking credit, I don't think that many feel offended by it. I sort of like the system of checks and balances. Can you imagine if we didn't receive HPs how many crazy sprees people would go on? Definitely interesting stuff to ponder, as you suggested previously.

Re: A question about inquires

RobertEG — Thu, 08 Feb 2018 21:14:50 GMT

While some creditors may have reason to code consumer initiated requests for credit as soft, I would argue that the focus should not be on their reasons, but rather on the reasons why others ordering credit reports shoould be denied that information, and on whether the CRAs are justified in such subjective exclusion of otherwise reportable inquries from their credit reports.

The public interest is determined by congress, who has mandated in FCRA 607(b) that “whenever a credit reporting agency prepares a consumer report, it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.”

When a party orders a credit report and/or score from a CRA, they have the right to assume the report reasonably includes the maximum possible accuracy of information recorded in the CRA file.

The CRA knows at the time of the inquiry that a prior credit inquiry was made by another, such as for the relevant purpose of evaluating a consumer-initiated request for credit, and yet choses to omit that information from their credit report if the prior inquire instructed them to do so by coding their inquiry as “soft.” That is an arbitrary lack of inclusion of the information without any reasonable basis.

Contrasting that subjective lack of inclusion of the information from their other policies regarding completeness of their credit reports, the CRAs go so far as to establish a formal policy instructing furnishers not to delete prior reporting of derogatory information based on consumer payment of a debt.

The CRAs regularly permit coding and recoding of inquries as soft without any published procedures to define when such inquiries have basis for exclusion from their credit reports. Inquiries based on a consumer inititated request for credit clearly are of recognized interest to others, as evidenced by their inclusion in credit scoring models. And yet the CRAs permit their exclusion from credit reports without any reasonable procedures, with only a coding or recoding instruction from the inquiree.

That does not appear to be in compliance with their reporting mandate under FCRA 607(b). At least it lacks explanation of why it is not.....