For the credit provider is there a difference between a HP and a SP?

[Anonymous]

I have always wondered what the credit provider can see in your report. Do they see the same in a HP and a SP? So if it is the same why do some choose to do a SP instead of a HP?  Any ideas?

Really curious about this.

[Anonymous]

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@Anonymous wrote:

I have always wondered what the credit provider can see in your report. Do they see the same in a HP and a SP? So if it is the same why do some choose to do a SP instead of a HP?  Any ideas?

Really curious about this.

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They see the exact same thing in a SP as they do with an HP.  It's entirely up to the creditor how they want to code the inquiry.  I assume they most often decide to code them as HPs to discourage people from applying for credit all the time (or more so than we already do).  Either that or they flip a coin and HP comes up most often. 

[Anonymous]

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@Anonymous wrote:

I have always wondered what the credit provider can see in your report. Do they see the same in a HP and a SP? So if it is the same why do some choose to do a SP instead of a HP?  Any ideas?

Really curious about this.

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Soft inquiries do not affect your credit score. Hard inquiries do.

Here’s how it works: Each time you apply for credit, your credit score drops a little bit—usually less than five points per inquiry, according to myFICO.com. That’s because seeking new credit can make you seem like more of a risk for lenders.

Hard credit checks are occasionally conducted multiple times for a specific item like a car loan or a mortgage. These can happen within a certain time frame — FICO calls them shopping periods and while each lender may use a different formula to calculate a shopping period, it’s typically 14–45 days. This means that multiple inquiries during this time are usually treated as a single inquiry on your credit score.

The impact of hard inquiries

New lines of credit represent only 10 percent of your score, according to myFICO.com, so the damage to your credit score from hard inquiries is typically minimal. But that doesn’t mean you’re in the clear to rack up hard credit inquiries:

• Inquiries can have a greater impact for someone with a short credit history and few accounts than for someone with a long history and wide range of credit experience.
• To a lender reviewing your credit report, many hard credit inquiries in a short period of time may indicate high credit risk, which could appear to creditors as if you are trying to get a lot of credit in a short period of time. (The exception is if you are rate shopping for a car, student or home loan during a short time period.)
• Even small drops in your credit score can result in higher interest rates when you borrow, which means you will pay more over the life of a loan.
• While credit inquiries are factored into your credit score for only 12 months, they remain on your credit report for two years.

[longtimelurker]

I think everyone understands that, the OPs question was what the issuer sees in each case.   (Some have a belief that a SP shows less and an issuer has to do a HP to see more, but, along with Irish, I don't think that is the case).

What I don't know if there is a cost difference for the issuer, which might explain the different approaches used by lenders

[Anonymous]

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longtimelurker wrote:

What I don't know if there is a cost difference for the issuer, which might explain the different approaches used by lenders

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That's an interesting possibility.  Quick Google search didn't help but this would make me wonder even more why a creditor would choose the HP route.

[Anonymous]

Thanks so much for your responses. I, too, was wondering about any penalty/cost to the lender for the different types of pulls.

[Loquat]

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@Anonymous wrote:

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@Anonymous wrote:

I have always wondered what the credit provider can see in your report. Do they see the same in a HP and a SP? So if it is the same why do some choose to do a SP instead of a HP?  Any ideas?

Really curious about this.

---

Soft inquiries do not affect your credit score. Hard inquiries do.

Here’s how it works: Each time you apply for credit, your credit score drops a little bit—usually less than five points per inquiry, according to myFICO.com. That’s because seeking new credit can make you seem like more of a risk for lenders.

Hard credit checks are occasionally conducted multiple times for a specific item like a car loan or a mortgage. These can happen within a certain time frame — FICO calls them shopping periods and while each lender may use a different formula to calculate a shopping period, it’s typically 14–45 days. This means that multiple inquiries during this time are usually treated as a single inquiry on your credit score.

The impact of hard inquiries

New lines of credit represent only 10 percent of your score, according to myFICO.com, so the damage to your credit score from hard inquiries is typically minimal. But that doesn’t mean you’re in the clear to rack up hard credit inquiries:

• Inquiries can have a greater impact for someone with a short credit history and few accounts than for someone with a long history and wide range of credit experience.
• To a lender reviewing your credit report, many hard credit inquiries in a short period of time may indicate high credit risk, which could appear to creditors as if you are trying to get a lot of credit in a short period of time. (The exception is if you are rate shopping for a car, student or home loan during a short time period.)
• Even small drops in your credit score can result in higher interest rates when you borrow, which means you will pay more over the life of a loan.
• While credit inquiries are factored into your credit score for only 12 months, they remain on your credit report for two years.

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This isn't exactly true in regards to point drops...that may be true initially (or if you have a thin file)...but in my experience, after I hit a certain number of inquiries they no longer affected my score at all.  

[longtimelurker]

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@Anonymous wrote:

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@longtimelurker wrote:

What I don't know if there is a cost difference for the issuer, which might explain the different approaches used by lenders

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That's an interesting possibility.  Quick Google search didn't help but this would make me wonder even more why a creditor would choose the HP route.

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I'm still surprised that SPs are used at all for customer initiated CLI requests and sometimes for card applications (Amex declines for card holders and e.g. NASA in the past).   If the customer is credit seeking, the "rules" suggest  it should be recorded for all other lenders.      Reminds me of Amex backdating in the sense it distorts the data, but even worse since while lenders could, with work, determine that a backdated card was really new, SPs don't appear at all, and if they see a CLI, they don't know if the customer intitiated it or was an auto.

[Anonymous]

there is a theory that some creditors prefer hard pulls as a method of discouraging you from apping for additional credit not only with them but with other creditors

as additional credit / new credit can lead to an increase in potential debt, thefore increasing your rsik % of defaulting / filing for BK ect..

[Anonymous]

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@longtimelurker wrote:

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@Anonymous wrote:

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@longtimelurker wrote:

What I don't know if there is a cost difference for the issuer, which might explain the different approaches used by lenders

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That's an interesting possibility.  Quick Google search didn't help but this would make me wonder even more why a creditor would choose the HP route.

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I'm still surprised that SPs are used at all for customer initiated CLI requests and sometimes for card applications (Amex declines for card holders and e.g. NASA in the past).   If the customer is credit seeking, the "rules" suggest  it should be recorded for all other lenders.      Reminds me of Amex backdating in the sense it distorts the data, but even worse since while lenders could, with work, determine that a backdated card was really new, SPs don't appear at all, and if they see a CLI, they don't know if the customer intitiated it or was an auto.

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Very good point. I was one of those "lucky ones" that had two soft pulls for both membership and a credit card with NASA. I didn't know at the time how lucky I was. Later, I would get more than one pull for the same thing. A glitch in the system? I don't know, but I did write one credit union and complained and all but one of the HP's were removed.