Month: December 2016

Credit Inquiries and Credit Score

Accounts: All 4 Types of Inquiries

Inquiry—is the common term that is used to describe someone who is checking into and/or viewing your credit. Basically they’re inquiring about someone’s track record and payment history to creditors.
Many experts in the industry rate the inquiries down to a two part description. The two part description is usually labeled “hard pull” or “soft pull” inquiries. Most people who refer to these two terms lack the over all understanding that there are actually 4 types of inquiries. The four different types of inquiries are used for different purposes and can either affect your score or not affect your score.

The four different types of credit inquiries are labeled as: account review inquiries, promotional inquiries, standard inquiries, and self pull inquiries. It’s easier to just use the first part of the term rather than having to verbally state all the words attached to inquiry with every description.

An “Account review inquiry” is when a potential creditor requests from the bureaus, permission, to review your account for only negative information within a certain time frame. This potential creditor does not receive good information about your credit and does not receive your credit scores (only information on recent delinquencies). An example would be if your ALLSTATE INSURANCE desires to request an account review on your negative payment history over the last 12 months. This information could be very valuable in determining your financial strength, financial reliability and responsibility, and in determining if there may be a common sense reason that you are now a higher insurance risk and are more prone to be in an accident and cost ALLSTATE INSURANCE more money.

This type of inquiry would be labeled a “soft pull”, because it is not factored into the credit risk scoring formula to remove points off your credit score. One of the major flaws with the account review inquiry is that it does not take into detail or exception if an individual has earned a lot more money, opened a lot of new accounts, mistaken or misapplied payments or, had lates that another creditor should’ve paid off to another creditor in the transfer and pay off of prior loans. This unfortunate example could lead to increased insurance rates to a prospering and responsible individual which is completely unfair.

“Promotional inquiries” are requested with the sole purpose of just receiving a credit score only. A promotional inquiry will not include information on recent lates, collections, public records, information on types of accounts, and who your creditors may be. Once again the only information that is provided to your requested potential creditor is simply a credit score. Promotional inquiries are usually distributed for the sole purpose of deciphering statistically who would be the best candidates to send credit promotions. The most common type of credit promotion is mailing offers with applications for credit cards. The credit card companies save time and money by narrowing their targeted audience to people who they feel would qualify for their credit offer. This saves them time, money, and makes the credit card companies way more money. Promotional Inquiries do not hurt your credit score and just like Account Review Inquiries, they are not even seen by your future potential creditors when they view your credit history.

“Standard Inquiries” are requested by your creditors when you are applying for a loan, money, line of credit, or extension of credit. You may be shopping for a car, boat, applying for a mortgage, applying to rent an apartment, leasing a tractor or construction equipment, buying/leasing furniture, or
computer equipment etc. These loans are very important to you because you want the best deal
knowing you can save thousands of dollars on interest by purchasing from a lender that gives you the best interest rate. The problem is the more you shop around the more potential risk you have of continually lowering your credit score. The scoring model has attempted to make changes so they don’t continually brutalize the savvy and thrifty shopper that is trying to get the best deal.

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This is not a commitment to lend or extend credit. Restrictions may apply. Information and/or data is subject to change without notice. All loans are subject to credit approval.