And, because you’re requesting additional credit, hard inquiries are included in your credit score calculations for one year – whether you’re approved or not. You have to give permission to the creditor to do a hard inquiry. These inquiries are also included in your credit report for two years. But they don’t affect your credit score because they don’t involve increasing your credit lines or debt load.Ī “hard” inquiry is done when you ask for new credit or (sometimes) when you request an increase in an existing credit line. Ellman, senior vice president for public policy and legal affairs for the Consumer Data Industry Association, an industry group for credit reporting agencies. Soft inquiries are listed on your credit history for two years, says Eric J. Some potential soft inquiry scenarios could include: an employer vetting you for a job an insurance company using your credit history to set your rates an existing creditor reviewing your account or a new creditor vetting you as a potential customer. They have precise definitions, and they mean different things to your credit.Ī “soft” inquiry is done when you’re not requesting new credit or an increase in your existing credit lines. ![]() You’ve probably heard of “hard” and “soft” inquiries. ‘soft’ inquiriesĪnd that brings us to the credit check. So the card offer and its terms could change dramatically once you complete an application and allow them to view your credit report. In both cases, the terms indicate that issuers have a limited knowledge of your financial situation. The search factor could be consumers who own homes within specific zip codes, or people who are on mailing lists for certain retailers. But that information might not come from a credit bureau. ![]() Often, an unsolicited “prequalification” offer indicates that you meet some type of issuer criteria, too, he says. It could be working from a list of consumers who meet certain credit report criteria – like credit scores above a certain number, or consumers who’ve had no late payments in the past two years. If the issuer approached you out of the blue, “preapproval” could indicate that it has a little more information on your credit, likely from a credit bureau, says McClary. One lender may use them interchangeably, while another may not. The meanings can and do vary widely with the issuer. In mortgage lending, the words “prequalified” and “preapproved” have precise meanings, but in the credit card arena they’re more terms of art than science. ![]() When it comes to differentiating between being “prequalified” and “preapproved” for a credit card, there’s really no a hard-and-fast, industry-wide definition, says Bruce McClary, senior vice president of communications for the National Foundation for Credit Counseling. What’s the difference between preapproval and prequalification? And, as with all things credit, it never hurts to have a good understanding of your credit history and credit score. Whether you received a prequalified or preapproved offer in the mail or you’re going through an issuer’s preapproval page online, it pays to understand the process and be ready to read a little fine print. One of the ironies of credit is that just applying for a credit card can impact your credit score.Īnd if you’re declined or don’t get the terms you need, you have to go through the process all over again – possibly with a lower score.īut if you’ve been prequalified or preapproved for a card, you might think your chances of success are a sure thing.
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