topic Re: Denials Should Be Soft Pulls in General Credit Topics

Denials Should Be Soft Pulls

indiolatino61 — Wed, 07 May 2025 01:09:06 GMT

Hello all...

I believe that the inquiries for credit apps that end in denials should be soft pulls. I don't think this would harm lenders, since they are not extending any credit. It would certainly benefit the consumer. I think most people are apprehensive in applying for credit in fear of the denial and the hard pull penalty for 2 years. Perhaps, even having the hard pull lasting one year instead of 2 would be beneficial. Granted, if you are offered the credit and accept, a hard pull seems justified under the current rules. Soft pulls exist, so I see no harm in utilizing them with the exception of approvals. Thanks for any clarification if I am not taking some parameter into consideration.

Re: Denials Should Be Soft Pulls

FicoMike0 — Wed, 07 May 2025 01:29:52 GMT

You're preaching to the choir, here. Those with reliable preapproval go along with this idea. I guess amex is the best, once you're in, no hps.

Re: Denials Should Be Soft Pulls

House1204 — Wed, 07 May 2025 01:49:23 GMT

Too bad bumpage doesn't work anymore.

Re: Denials Should Be Soft Pulls

indiolatino61 — Wed, 07 May 2025 02:08:29 GMT

@FicoMike0 wrote:
You're preaching to the choir, here. Those with reliable preapproval go along with this idea. I guess amex is the best, once you're in, no hps.

Sometimes the choir is the only one that will listen...lol.

Re: Denials Should Be Soft Pulls

Varsity_Lu — Wed, 07 May 2025 10:05:08 GMT

So, in Jurassic Park, the gamekeeper was really watching the animals that were probing the fences looking for breaks and weaknesses. The ones that just grazed all day by the lake were not concening. Isn't that what the HP ding does for lenders? It tells them the ones that are dangerous, vicious, and clever? They are more risky because they are probing the boundaries?

Oh, who am I kidding. I don't know what I'm talking about. I just thought the analogy might work.

Re: Denials Should Be Soft Pulls

FlaDude — Wed, 07 May 2025 13:03:19 GMT

@indiolatino61 wrote:
Perhaps, even having the hard pull lasting one year instead of 2 would be beneficial.

Hard pulls stay on your report for 2 years but everything I've read here says they only affect FICO scores for 1 year.

Re: Denials Should Be Soft Pulls

dfwxjer — Wed, 07 May 2025 15:16:51 GMT

Denials should absolutely remain as HPs. Credit seeking is a huge red flag and indicator of deteriorating finances.

Re: Denials Should Be Soft Pulls

Varsity_Lu — Wed, 07 May 2025 15:37:05 GMT

@dfwxjer wrote:
Denials should absolutely remain as HPs. Credit seeking is a huge red flag and indicator of deteriorating finances.

It's not that black and white. I am seeking a couple of new cards not because my finances are deteriorating but rather because I want more cash back. Fidelity 2% > Quicksilver 1.5%, Max Cash 5% > Voice 3.15%.

By your logic everyone should only have one card: the very first card they ever started with.

Re: Denials Should Be Soft Pulls

Patient957 — Wed, 07 May 2025 16:19:45 GMT

@dfwxjer wrote:
Denials should absolutely remain as HPs. Credit seeking is a huge red flag and indicator of deteriorating finances.

This is the reason it would never happen. Hard pull denials are one of the few ways lenders can detect credit seeking.

@Varsity_Lu wrote:
It's not that black and white. I am seeking a couple of new cards not because my finances are deteriorating but rather because I want more cash back.

It's not your 2 HPs they're worried about. It's the guy with 25 HPs last month with 24 denials. Without the HPs, this huge red flag would be invisible to them. It just looks like a dude who got one credit card instead of dude frantically seeking any and all credit he can get his hands on.

Re: Denials Should Be Soft Pulls

Varsity_Lu — Wed, 07 May 2025 16:59:09 GMT

@Patient957 wrote:
It's not your 2 HPs they're worried about. It's the guy with 25 HPs last month with 24 denials. Without the HPs, this huge red flag would be invisible to them. It just looks like a dude who got one credit card instead of dude frantically seeking any and all credit he can get his hands on.

I completely agree with you. My example was just trying to point out the fallacy in his logic.

Re: Denials Should Be Soft Pulls

indiolatino61 — Wed, 07 May 2025 20:36:12 GMT

@Varsity_Lu wrote:
So, in Jurassic Park, the gamekeeper was really watching the animals that were probing the fences looking for breaks and weaknesses. The ones that just grazed all day by the lake were not concening. Isn't that what the HP ding does for lenders? It tells them the ones that are dangerous, vicious, and clever? They are more risky because they are probing the boundaries?

Oh, who am I kidding. I don't know what I'm talking about. I just thought the analogy might work.

First you make a valid analogy, then you say to ignore it...lol. My brain can't do 180's that fast anymore.

Re: Denials Should Be Soft Pulls

indiolatino61 — Wed, 07 May 2025 20:49:35 GMT

@dfwxjer wrote:
Denials should absolutely remain as HPs. Credit seeking is a huge red flag and indicator of deteriorating finances.

Another valid point, as yes, someone with 25 denials in a month is concerning. However, the same reason(s) the prior denials were issued are still there for another lender to see. "Credit seeking" is somewhat of a vague term, as every app is seeking credit, even if it is not readily needed at the time of the app. I understand your reasoning, I just think with so many other data points and parameters available, a soft pull "benefit" would not be so detrimental to a lender.

Re: Denials Should Be Soft Pulls

indiolatino61 — Wed, 07 May 2025 20:44:14 GMT

@Varsity_Lu wrote:
@dfwxjer wrote:
Denials should absolutely remain as HPs. Credit seeking is a huge red flag and indicator of deteriorating finances.
It's not that black and white. I am seeking a couple of new cards not because my finances are deteriorating but rather because I want more cash back. Fidelity 2% > Quicksilver 1.5%, Max Cash 5% > Voice 3.15%.

By your logic everyone should only have one card: the very first card they ever started with.

Valid point, as usual. Nothing is usually black and white, especially in this credit bureau/scoring game we play.

Re: Denials Should Be Soft Pulls

indiolatino61 — Wed, 07 May 2025 20:47:59 GMT

@Patient957 wrote:
@dfwxjer wrote:
Denials should absolutely remain as HPs. Credit seeking is a huge red flag and indicator of deteriorating finances.
This is the reason it would never happen. Hard pull denials are one of the few ways lenders can detect credit seeking.

@Varsity_Lu wrote:
It's not that black and white. I am seeking a couple of new cards not because my finances are deteriorating but rather because I want more cash back.
It's not your 2 HPs they're worried about. It's the guy with 25 HPs last month with 24 denials. Without the HPs, this huge red flag would be invisible to them. It just looks like a dude who got one credit card instead of dude frantically seeking any and all credit he can get his hands on.

Agreed...but as I said in a previous post, the same reason(s) the denials were issued in the first place are still there for lenders to see. A high utilization, low income, low age of accounts, charge-offs, late payments, BK's...all these weight much more heavily than inquiries. A lender will most likely deny this app even if no inquiries are on file.

Re: Denials Should Be Soft Pulls

dfwxjer — Wed, 07 May 2025 20:56:15 GMT

@Varsity_Lu wrote:
@dfwxjer wrote:
Denials should absolutely remain as HPs. Credit seeking is a huge red flag and indicator of deteriorating finances.
It's not that black and white. I am seeking a couple of new cards not because my finances are deteriorating but rather because I want more cash back. Fidelity 2% > Quicksilver 1.5%, Max Cash 5% > Voice 3.15%.

By your logic everyone should only have one card: the very first card they ever started with.

There's no fallacy with the logic and that's quite a jump in your logic.

Why should a denial be treated any different than an approval?

You're mixing up the normal process of obtaining credit with what lenders consider to be credit seeking. Opening a couple new accounts is not the same as credit seeking. Lenders look for the LOL/24 borrowers, not the people that are obtaining credit at a normal velocity. Not to mention, I'm assuming you received approvals for those accounts so your example has nothing to do with denials remaining as HPs.

The reason denials should remain as HPs is so lenders can see if a borrower went on a mega app spree. Borrowers don't get to dictate that HPs only count if they're in their favor.

Re: Denials Should Be Soft Pulls

indiolatino61 — Wed, 07 May 2025 21:09:39 GMT

@dfwxjer wrote:
@Varsity_Lu wrote:
@dfwxjer wrote:
Denials should absolutely remain as HPs. Credit seeking is a huge red flag and indicator of deteriorating finances.
It's not that black and white. I am seeking a couple of new cards not because my finances are deteriorating but rather because I want more cash back. Fidelity 2% > Quicksilver 1.5%, Max Cash 5% > Voice 3.15%.

By your logic everyone should only have one card: the very first card they ever started with.
There's no fallacy with the logic and that's quite a jump in your logic.

Why should a denial be treated any different than an approval?

You're mixing up the normal process of obtaining credit with what lenders consider to be credit seeking. Opening a couple new accounts is not the same as credit seeking. Lenders look for the LOL/24 borrowers, not the people that are obtaining credit at a normal velocity. Not to mention, I'm assuming you received approvals for those accounts so your example has nothing to do with denials remaining as HPs.

The reason denials should remain as HPs is so lenders can see if a borrower went on a mega app spree. Borrowers don't get to dictate that HPs only count if they're in their favor.

I see some clarification on my part is needed. I understand all of the points, pro and con, delineated here. We all are aware that any "benefit" will ultimately be used in a way in which it was not intended by some. Perhaps if I had included a proviso that the first 1 or 2 app inquiries ending in denials should be soft pulls in order to prevent its misuse would have been more clear. Why have soft pulls at all if they are such a barrier in deciding applications? It is solely my opinion that denials should be treated differently than approvals because the applicant has not been given any credit line to misuse, so the lender has no worries as to payments or defaulting.

Re: Denials Should Be Soft Pulls

dfwxjer — Wed, 07 May 2025 21:11:50 GMT

@indiolatino61 wrote:
@dfwxjer wrote:
@Varsity_Lu wrote:
@dfwxjer wrote:
Denials should absolutely remain as HPs. Credit seeking is a huge red flag and indicator of deteriorating finances.
It's not that black and white. I am seeking a couple of new cards not because my finances are deteriorating but rather because I want more cash back. Fidelity 2% > Quicksilver 1.5%, Max Cash 5% > Voice 3.15%.

By your logic everyone should only have one card: the very first card they ever started with.
There's no fallacy with the logic and that's quite a jump in your logic.

Why should a denial be treated any different than an approval?

You're mixing up the normal process of obtaining credit with what lenders consider to be credit seeking. Opening a couple new accounts is not the same as credit seeking. Lenders look for the LOL/24 borrowers, not the people that are obtaining credit at a normal velocity. Not to mention, I'm assuming you received approvals for those accounts so your example has nothing to do with denials remaining as HPs.

The reason denials should remain as HPs is so lenders can see if a borrower went on a mega app spree. Borrowers don't get to dictate that HPs only count if they're in their favor.
I see some clarification on my part is needed. We all are aware that any "benefit" will ultimately be used in a way in which it was not intended by some. Perhaps if I had included a proviso that the first 1 or 2 app inquiries ending in denials should be soft pulls in order to prevent its misuse. Why have soft pulls at all if they are such a barrier in deciding applications?

Unless there's an existing bank relationship, typically soft pulls can only provide estimated approvals, and the actual credit decision is made off a hard pull. Sometimes details in the actual credit report don't translate to the info generated in a soft pull, and is revealed when the hard pull and full review of the report is completed.

Soft pulls are good for providing prescreen offers, and identifying borrowers that fall in the general range of their products. Or when borrowers have an existing relationship, lenders can use a soft pull to verify the borrower is still in the same general range from the initial credit pull.

Of course ymmv

Re: Denials Should Be Soft Pulls

indiolatino61 — Wed, 07 May 2025 21:23:49 GMT

@dfwxjer wrote:
@indiolatino61 wrote:
@dfwxjer wrote:
@Varsity_Lu wrote:
@dfwxjer wrote:
Denials should absolutely remain as HPs. Credit seeking is a huge red flag and indicator of deteriorating finances.
It's not that black and white. I am seeking a couple of new cards not because my finances are deteriorating but rather because I want more cash back. Fidelity 2% > Quicksilver 1.5%, Max Cash 5% > Voice 3.15%.

By your logic everyone should only have one card: the very first card they ever started with.
There's no fallacy with the logic and that's quite a jump in your logic.

Why should a denial be treated any different than an approval?

You're mixing up the normal process of obtaining credit with what lenders consider to be credit seeking. Opening a couple new accounts is not the same as credit seeking. Lenders look for the LOL/24 borrowers, not the people that are obtaining credit at a normal velocity. Not to mention, I'm assuming you received approvals for those accounts so your example has nothing to do with denials remaining as HPs.

The reason denials should remain as HPs is so lenders can see if a borrower went on a mega app spree. Borrowers don't get to dictate that HPs only count if they're in their favor.
I see some clarification on my part is needed. We all are aware that any "benefit" will ultimately be used in a way in which it was not intended by some. Perhaps if I had included a proviso that the first 1 or 2 app inquiries ending in denials should be soft pulls in order to prevent its misuse. Why have soft pulls at all if they are such a barrier in deciding applications?
Unless there's an existing bank relationship, typically soft pulls can only provide estimated approvals, and the actual credit decision is made off a hard pull. Sometimes details in the actual credit report don't translate to the info generated in a soft pull, and is revealed when the hard pull and full review of the report is completed.

Soft pulls are good for providing prescreen offers, and identifying borrowers that fall in the general range of their products. Or when borrowers have an existing relationship, lenders can use a soft pull to verify the borrower is still in the same general range from the initial credit pull.

Of course ymmv

Fair enough...I just think it would be "nice" to be able to put in "a couple" of apps without the fear of a denial and the added "punishment" of a 2-year lowering of your score, especially if you are new to credit. I realize lenders must protect themsleves, but with the myriad of data points and "secret" parameters they utilize, throwing us a proverbial bone would not be a significant detriment to their credit granting leviathan.

Re: Denials Should Be Soft Pulls

Varsity_Lu — Wed, 07 May 2025 21:29:30 GMT

@dfwxjer wrote:
@Varsity_Lu wrote:
@dfwxjer wrote:
Denials should absolutely remain as HPs. Credit seeking is a huge red flag and indicator of deteriorating finances.
It's not that black and white. I am seeking a couple of new cards not because my finances are deteriorating but rather because I want more cash back. Fidelity 2% > Quicksilver 1.5%, Max Cash 5% > Voice 3.15%.

By your logic everyone should only have one card: the very first card they ever started with.
There's no fallacy with the logic and that's quite a jump in your logic.

Why should a denial be treated any different than an approval?

You're mixing up the normal process of obtaining credit with what lenders consider to be credit seeking. Opening a couple new accounts is not the same as credit seeking. Lenders look for the LOL/24 borrowers, not the people that are obtaining credit at a normal velocity. Not to mention, I'm assuming you received approvals for those accounts so your example has nothing to do with denials remaining as HPs.

The reason denials should remain as HPs is so lenders can see if a borrower went on a mega app spree. Borrowers don't get to dictate that HPs only count if they're in their favor.

Look, I agree with you on HPs, and excessive HPs are definitely a red flag. I just think you need to be careful implying people who seek new credit have deteriorating finances. That's isn't always true. When you define credit seeking the way you want, your argument makes sense. However, the definition of credit seeking is not consistent from lender to lender. US Bank, for instance, won't usually approve anyone with even a single recent inquiry. That may be considered normal process for other banks, but it's credit seeking for USB. There was a thread a while ago about this very thing:

Credit Seeking Definition

The problem is that what is credit seeking to you may be normal to me. And people with good finances still seek credit.

Re: Denials Should Be Soft Pulls

Tdatb64 — Wed, 07 May 2025 23:53:34 GMT

I think I would rather see a mandate that all issuers utilize a system like AMEX's, where you see if you're approved and the terms (SL & APR, at least) before you decide to accept or decline. The issuer then gets the option to do a hard pull if you accept the offer but no option to do so if you decline.