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

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lyTENciL
Regular Contributor

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

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?


FICO (12/22): EX8 838. TU8 826. EQ9 837.
Profile: Clean/thick/aged/new. Revolvers: 7 open, 1 closed. 1 Install.
AoOA/RA 20y. AAoA 4.5y. AoYA/RA 6m. TCL $128.3K.
Message 1 of 19
18 REPLIES 18
CreditCuriosity
Moderator Emeritus

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

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.

Message 2 of 19
ChargedUp
Senior Contributor

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


@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. 

Message 3 of 19
lyTENciL
Regular Contributor

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


@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...


FICO (12/22): EX8 838. TU8 826. EQ9 837.
Profile: Clean/thick/aged/new. Revolvers: 7 open, 1 closed. 1 Install.
AoOA/RA 20y. AAoA 4.5y. AoYA/RA 6m. TCL $128.3K.
Message 4 of 19
Remedios
Credit Mentor

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

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 

 

 

Message 5 of 19
lyTENciL
Regular Contributor

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

@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.


FICO (12/22): EX8 838. TU8 826. EQ9 837.
Profile: Clean/thick/aged/new. Revolvers: 7 open, 1 closed. 1 Install.
AoOA/RA 20y. AAoA 4.5y. AoYA/RA 6m. TCL $128.3K.
Message 6 of 19
Anonymous
Not applicable

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

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.

Message 7 of 19
RobertEG
Legendary Contributor

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

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.

 

 

Message 8 of 19
AzCreditGuy
Established Contributor

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


@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.

 

 


 

Message 9 of 19
coldfusion
Community Leader
Mega Contributor

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


@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.

 

 

(2/2024)
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Artist formerly known as the_old_curmudgeon who was formerly known as coldfusion
Message 10 of 19
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