topic Re: Why isn’t a soft pull good enough for my creditors? in General Credit Topics

Why isn’t a soft pull good enough for my creditors?

lyTENciL — Mon, 28 Dec 2020 23:00:58 GMT

What information can be gained from an HP vs SP? I'm wondering why SP CLIs tend to yield much smaller increases. Often, new card apps yield much bigger TLs right away than SP CLI for the same account holder. Why is that? Presumably an HP could net a commensurate CLI to new app, but is that what happens?

Re: Why isn’t a soft pull good enough for my creditors?

CreditCuriosity — Mon, 28 Dec 2020 23:05:59 GMT

Most likely to make other lenders aware you are seeking additional credit. Yes they do have all the information they need to make the decision, but most lenders don't play that way and require a HP for bigger increases.

Re: Why isn’t a soft pull good enough for my creditors?

ChargedUp — Tue, 29 Dec 2020 01:37:09 GMT

@CreditCuriosity wrote:
Most likely to make other lenders aware you are seeking additional credit. Yes they do have all the information they need to make the decision, but most lenders don't play that way and require a HP for bigger increases.

But then there's those who have to lift their leg on 2 or 3 bureaus over one app. This is the part I never quite understood as a new account is obvious in itself and 99.9% of lenders report to all 3 bureaus.

Re: Why isn’t a soft pull good enough for my creditors?

lyTENciL — Tue, 29 Dec 2020 01:50:40 GMT

@ChargedUp wrote:
@CreditCuriosity wrote:
Most likely to make other lenders aware you are seeking additional credit. Yes they do have all the information they need to make the decision, but most lenders don't play that way and require a HP for bigger increases.
But then there's those who have to lift their leg on 2 or 3 bureaus over one app. This is the part I never quite understood as a new account is obvious in itself and 99.9% of lenders report to all 3 bureaus.

My thoughts exactly. They can see new accounts and see credit line amounts, right? So that covers credit-seeking. Oh but I guess without the HP record, they wouldn't know about credit denials.

I'm also thinking there's info only available from hard pull...

Re: Why isn’t a soft pull good enough for my creditors?

Remedios — Tue, 29 Dec 2020 02:14:17 GMT

Each lender applies their own interpretation of when HP is needed.

Some (rare ones) will issue cards based on SPs.

Others (by far more common) will use HP for opening an account, then utilize SPs for CLI requests (BoA, Citi, Discover etc).

Then, there are lenders like Chase whose interpretation is that every consumer initiative request for additional credit is subject to HP.

Since most people do not apply for multiple cards every year, HP isn't a big deal. It's just a small price that needs to paid to get where you need to be.

Here, there is culture of fear around HPs, which is absolutely ridiculous...hating a HP but stacking accounts like candy.

Sometimes lenders will change their mind, going from HPs to SPs or vice versa. Legally, both approaches are equally valid.

As to why HP multiple CRAs instead of just one, that falls again on lenders policies.

Onething is for sure, those who insist on HPs sure don't get slammed much by customer initiated requests

Re: Why isn’t a soft pull good enough for my creditors?

lyTENciL — Tue, 29 Dec 2020 06:55:51 GMT

@Remedios

Ok, but I'm still wondering what is the utility of the HP versus SP, for the lender?

I can only find info on the differences from the consumer's perspective.

Re: Why isn’t a soft pull good enough for my creditors?

Anonymous — Tue, 29 Dec 2020 07:44:40 GMT

There are no differences from the lender perspective. It's just sort of an unwritten rule or code between lenders... they want to be able to see HPs (from other lenders) so the they use HPs themselves.

I personally think all requests for credit should result in HPs, whether a new account or a credit limit increase. If SP CLIs went away you'd see far less people with ridiculously high unnecessary limits. It would also create a level playing field across all lenders... HP for everything, period end of story... none of this well lender A does this, but B does that and C does whatever they feel like that day etc.

Re: Why isn’t a soft pull good enough for my creditors?

RobertEG — Tue, 29 Dec 2020 10:26:22 GMT

There is only one type of so-called soft pull that gets different level/degree of information, and that is the so-called promotional inquiry provided for under FCRA 604(c).

In a nutshell, section 604(c) provides a service to potential creditors with whom you do not have a current relationship to obtain a screening of all consumer credit files with a CRA against specified criteria, and obtain a listing of consumers whose files meet those criteria.

That avoids the need to send out bunches of blind solicitations for credit for which the consumer has little or no chance of qualifying.

However, such promotional inquiries only obtain consumer names and contact addresses, and cannot contain any account specific information. They are explicitly prohibited from being shown in any credit report provided to other inquirees, which is the very definition of a soft pull.

All other types of inquiries receive the same (full) disclosure of consumer information.

CRA policy provides the ability for certain other types of inquiries to also be excluded from reports provided to other parties, but that policy is not set by statute.

As stated by others, reporting as a hard pull serves other inquirees by providing a more complete profile of consumers, and can be said to be in the interest of the system. That is a subjective determination that is left to inquirees.

Re: Why isn’t a soft pull good enough for my creditors?

AzCreditGuy — Tue, 29 Dec 2020 16:32:13 GMT

@Anonymous wrote:
There are no differences from the lender perspective. It's just sort of an unwritten rule or code between lenders... they want to be able to see HPs (from other lenders) so the they use HPs themselves.

I personally think all requests for credit should result in HPs, whether a new account or a credit limit increase. If SP CLIs went away you'd see far less people with ridiculously high unnecessary limits. It would also create a level playing field across all lenders... HP for everything, period end of story... none of this well lender A does this, but B does that and C does whatever they feel like that day etc.

Good thing you dont control the credit market....All my as you put it "ridiculously high unnecessary limits" are from SPs, just because you dont need them, other's do for different reasons.

HPs are a joke for CLIs, Barclays wanted to HP to get my back to my $5k line, which they reduced after I went on a credit spree. Told them they could shove it.

Re: Why isn’t a soft pull good enough for my creditors?

coldfusion — Tue, 29 Dec 2020 16:53:19 GMT

@Anonymous wrote:

I personally think all requests for credit should result in HPs, whether a new account or a credit limit increase. If SP CLIs went away you'd see far less people with ridiculously high unnecessary limits. It would also create a level playing field across all lenders... HP for everything, period end of story... none of this well lender A does this, but B does that and C does whatever they feel like that day etc.

Interesting comments given that you yourself used SP CLIs to reach $50K on a Discover card and even higher than that on your BCE.

Re: Why isn’t a soft pull good enough for my creditors?

Anonymous — Tue, 29 Dec 2020 18:02:46 GMT

@coldfusion wrote:
Interesting comments given that you yourself used SP CLIs to reach $50K on a Discover card and even higher than that on your BCE.

Absolutely. As I've said a bunch of times in the past, I play by the rules of the game just like everyone else does. It doesn't mean that I agree with them. I do think it would make far more sense to have all requests for credit (CLI increases constitute this) result in HPs across the board as it would create a level playing field across all lenders. It would surely reduce overall limits of many, myself included which would be absolutely fine.

I would see no issue at all with all CLI requests resulting in a HP and honestly don't think anyone else would either if they weren't used to the current system. The problem with the current system is that lenders do what they want, some doing SPs some doing HPs so it just makes it seem like those doing HPs are in the wrong and as a result we gripe about them. If they were either all SPs or all HPs (black and white, no gray areas) there would be no grounds to argue. And it's my opinion that since a self-initiated CLI is indeed a request for additional credit it should in theory result in a HP, as HPs are supposed to be used to document that credit was sought after.

Re: Why isn’t a soft pull good enough for my creditors?

Anonymous — Tue, 29 Dec 2020 19:32:01 GMT

@AzCreditGuy wrote:
Good thing you dont control the credit market....All my as you put it "ridiculously high unnecessary limits" are from SPs, just because you dont need them, other's do for different reasons.

If you/they need them for whatever reasons they'd take HPs for them then. Someone like myself that doesn't need them probably wouldn't, or only would on the select cards that I felt a greater limit on would result in a benefit. The only reason it sounds crazy is because it's not what we're used to. If everyone added (say) 3-4 inquiries per bureau to their file it really wouldn't matter in the grand scheme of things as everyone would still be the same relative to one another. The system would self-correct quite quickly.

Robert summed it up nicely when he said that reporting as a hard pull serves other inquirees by providing a more complete profile of consumers, and can be said to be in the interest of the system. I've always said that more data > less data.

Re: Why isn’t a soft pull good enough for my creditors?

Remedios — Tue, 29 Dec 2020 19:43:08 GMT

Out of curiosity, if more accurate data is better, why advocate GW removals?

I would think that a negative being removed has by far more impact and provides "false" profile data than something as irrelevant as HP

Re: Why isn’t a soft pull good enough for my creditors?

DaveInAZ — Tue, 29 Dec 2020 23:02:32 GMT

@Remedios wrote:
Each lender applies their own interpretation of when HP is needed.
Some (rare ones) will issue cards based on SPs.
Others (by far more common) will use HP for opening an account, then utilize SPs for CLI requests (BoA, Citi, Discover etc).
Then, there are lenders like Chase whose interpretation is that every consumer initiative request for additional credit is subject to HP.

Since most people do not apply for multiple cards every year, HP isn't a big deal. It's just a small price that needs to paid to get where you need to be.

Here, there is culture of fear around HPs, which is absolutely ridiculous...hating a HP but stacking accounts like candy.

Sometimes lenders will change their mind, going from HPs to SPs or vice versa. Legally, both approaches are equally valid.

As to why HP multiple CRAs instead of just one, that falls again on lenders policies.
Onething is for sure, those who insist on HPs sure don't get slammed much by customer initiated requests

Well, there is that - I see folks here request a CLI every few months if it's a SP. I rarely request a SP, I'm generally happy with the CLs on my cards.

I decided some time ago I absolutely will not allow a HP just for CLI, I keep my credit reports locked so they can't slip one in on me. I think that my responsible use of a card and it's CL should justify an auto CLI, if not I move on, sometimes significantly reducing my use of a card, sometimes just closing them.

Re: Why isn’t a soft pull good enough for my creditors?

Anonymous — Wed, 30 Dec 2020 02:34:36 GMT

@Remedios wrote:
Out of curiosity, if more accurate data is better, why advocate GW removals?

I would think that a negative being removed has by far more impact and provides "false" profile data than something as irrelevant as HP

Quite simply, because you can. Just like CLIs being available via SP when they should result in HPs, one can remove negative items via GW requests. Again, it just comes down to the individual taking advantage of whatever the system allows. I don't fault the individual for playing the hand they're dealt, I fault the system for dealing it. I do however agree completely and the fact that GW is obtainable in the first place is counterproductive to the purpose of the system.

Re: Why isn’t a soft pull good enough for my creditors?

Anonymous — Wed, 30 Dec 2020 07:44:26 GMT

Well just my two cents. As Robert already cleared up, an account review SP gives the same information as a HP. Lenders do it to put other lenders on notice that you are seeking credit. It’s a simple as that. This way if you apply, other lenders are aware of the possibility before the account hits the report.

You’re right, it’s not a perfect system since most only HP 1 bureau, but would you rather them be like capital one?

I prefer softpull CLIs. I understand the reasoning of HPs, even though I don’t like them, but they’re a necessary cost of doing business, imo.

Re: Why isn’t a soft pull good enough for my creditors?

Anonymous — Wed, 30 Dec 2020 15:50:11 GMT

@Anonymous wrote:

You’re right, it’s not a perfect system since most only HP 1 bureau, but would you rather them be like capital one?

I think the issue here again comes down to inconsistency. If every single lender did a triple-HP, not a single person would ever complain about the "dreaded" Capital One triple-pull. I also think it would be nice if for consistency purposes that all 3B always contained the same amount of HPs. However, a triple HP wouldn't be necessary so long as all lenders are pulling all 3 reports for all applications for credit. For example, they HP one and SP the other 2. Again, more data is better, so looking at all 3 reports is simply the smart business move. As long as all 3 are pulled, the HP will be seen regardless of which bureau it falls on. The way it's currently done is just all over the place and inconsistent. Whether or not that matters to someone is their personal opinion.

Re: Why isn’t a soft pull good enough for my creditors?

Duke_Nukem — Wed, 30 Dec 2020 16:06:14 GMT

As a consumer, I dislike CapOne's policy of triple HP; however, I respect it and if I ran a $$ lending company would probably do the same thing.

As a "knowledgable" consumer, I choose not to app for CC's with CapOne due to their policy (unless they have a more appealing card than their current line up). When I didn't know any better about CapOne's policy (which applies to probably 98% of the US population), I took those triple HP's and thought all creditors did the same thing.

To evolve this subject a bit further, why does PenFed hit you with a HP when you are being added to your spouse's existing savings account (even though you aren't a member of PenFed which they told me would require yet another HP)? That one really irritates me as it should be a SP IMO.

Re: Why isn’t a soft pull good enough for my creditors?

Anonymous — Wed, 30 Dec 2020 16:11:55 GMT

@Duke_Nukem wrote:
When I didn't know any better about CapOne's policy (which applies to probably 98% of the US population), I took those triple HP's and thought all creditors did the same thing.

Right and if all creditors did do the same thing it would just be the way it is and we wouldn't hear gripes about Capital One being the odd man out.

While I don't have an answer to your PenFed question, it again just speaks to the overall theme of inconsistency across lenders.