Can You Bump Hard Inquiries Off Your Credit Report By Monitoring With Soft Inquiries?

Posts Tagged ‘credit’

Can You Bump Hard Inquiries Off Your Credit Report By Monitoring With Soft Inquiries?

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“Soft” inquiries – even lots of them – will not bump off or remove “hard” inquiries on your credit reports. This is because all inquiries stay on your credit report for two years, and hard inquiries count against you, for the purposes of calculating your FICO scores, for one year.

What Is the Difference Between a “Hard” and a “Soft” Inquiry?

A hard inquiry in your credit file is a record of any application for credit that you made. For example, if you seek a mortgage, student loan or car loan, or even if you apply for a credit card or perhaps request an increase in your current credit card limit, any of these actions can result in an inquiry on your Equifax, Experian or TransUnion credit files. Other business-related transactions can also produce inquiries: Among them: signing a cell phone contract, launching new service with a utility provider (like a local gas or electric company), filling out an apartment rental application, and – as even using a debit card to reserve or pay for a car rental. All of these activities generate inquiries that are known as “hard” pulls. By contrast, when you examine your own credit report, or when an existing creditor does a review of your credit files, those are called “soft” pulls, and they do not impact your credit score. So let’s say you use a credit monitoring service, and you review your credit report each month – or even weekly or daily. Those “soft” inquiries will be noted on your credit files, but they won’t hurt your FICO scores, and they won’t make your “hard” inquiries go away.

Don’t Allow Excessive Hard Inquiries of Your Credit Files

The American Bankers Association says a single inquiry can drop your credit score by 35 points. According to the formula used by Fair Isaac Corporation (the company that created FICO credit scores), inquiries account for 10% of your score. So think about it this way: If your FICO score is 680 points, inquiries account for 68 of those points. Obviously it’s not that simple, because different elements of FICO’s formula are weighted differently, based on a slew of considerations. And inquiries can have a greater or lesser impact on your score depending on the length of your credit history and other factors. Nevertheless, to minimize the impact of inquiries on your credit rating, only apply for credit when you truly need it. And if you have to shop around – say, for a mortgage or a new car loan – do so within a concentrated period of time. FICO executives say that multiple inquiries for auto financing or home loans are treated as a single inquiry, so long as the inquiries all occur within a 14-day period. The idea, according to FICO, is for them to avoid penalizing consumers for shopping around for the best rate.

What Credit Card Should I Get to Help Build My FICO Credit Score?

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Author: The Money Coach

Q: I Became Debt Free This Month. I Have $4,000 Saved and No Bank Account. Where Should I Go? Also What Credit Card Should I Get to Help Build My FICO Credit Score?

A: Congratulations on eliminating your debt. You should be proud of that accomplishment – and of saving $4,000. As of early 2010, Capital One is offering an attractive savings account that you should investigate. It’s the InterestPlus Online Savings Account. For those who keep $2,500 in the account, It pays a very competitive Annual Percentage Yield and it gives you the opportunity to earn a 10% quarterly bonus. Get more information online at http://www.CapitalOne.com/DirectBanking.

To find a good credit card, also take advantage of the power of the Internet. Go to http://www.CardRatings.com to find a competitive credit card that fits your needs. There are all different types of cards: for students, frequent travelers, people with excellent credit, those with bad credit, etc. The “best” credit card is the one that suits your spending habits and financial profile. Only you know how often you will use the card. No matter what card you choose, only charge what is absolutely necessary and what you can reasonable pay off quickly – ideally every month. This will be the single best thing you can do to boost your FICO credit scores.

Should I put a “consumer statement” in my credit report?

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Author: The Money Coach

Q: Should I put a “consumer statement”in my credit report to explain a bad mark or mistake in my credit file?

A: Despite what some people may suggest to you, it’s best to refrain from adding a “Consumer Statement” to your credit files.

Consumer Statements in Your Credit Files

Under the Fair Credit Reporting Act, you are allowed to add a 100-word “Consumer Statement” to any of your credit reports if you have disputed an item in your credit files, but the item was not removed because it was verified by a creditor. Frequently, consumers think that taking advantage of this “right” to add a consumer statement is a good opportunity. After all, you would get a chance to divulge what happened, elaborate on the dispute, or perhaps explain why going through a divorce resulted in you not paying a bill or how being laid off for six months is what led you to default on a loan. In your mind, perhaps you think that your explanation will prove that something wasn’t your fault, or at the very least t show a lender that you had a “good” reason for failing to pay.

The Lender’s Point of View

Well, the truth of the matter is: from a lender’s standpoint, especially in today’s economic environment, there is not a single reason under the sun that can justify something negative in your credit report. Creditors want to know whether you paid your debts as agreed, or not. Period. So don’t fool yourself into thinking that your consumer statement will be “taken into account.” It won’t. In fact, your 100-word statement will most likely be viewed as confirmation that you were financially irresponsible, perhaps because you didn’t manage your finances in such a way as to weather some unexpected event such as divorce or a layoff. Nor will it help your cause to have a Consumer Statement, because it lumps you in the same category with all the other credit-damaged individuals who are using consumer statements to plead their case.

So my advice about Consumer Statements is simple: Refrain from putting any statement at all on your credit file. For those of you fretting over something in your credit file, and worried that it may damage your chances of getting a needed loan, fear not. When you apply for a loan of any kind, chances are it will be approved or denied solely based on numbers – not words. The numbers will be things like: What is your FICO score? How much debt are you carrying? What is your income? If your application is truly in a gray area, and a potential lender has a question about your credit history, rest assured that they’ll ask if they need more information from you in order to approve your loan. And at that point, you can write a letter directly to that lender, succinctly explaining anything you feel is necessary. You don’t need to put explanations it in a credit report, however, where scores of businesses and others will see it, and may even view the consumer statement as an admission of guilt (so to speak), and as proof that you aren’t a good credit risk because you couldn’t pay your bills on time.

How a Consumer Statement Can Actually Hurt Your Credit Reputation

There is another practical reason why you should avoid Consumer Statements: They remain on your credit reports for 10 long years. Assume you had a dispute with a creditor and, through your own perseverance, or through some settlement, you actually resolved the matter. The dispute is over. The creditor may even agree to delete negative information, change your payment status or update your credit history – all of which could wipe away any reference to the matter. But if you have that consumer statement still lingering on your credit file, it will be a “heads up” to potential lenders and others that – at one point – you were late with a bill or had some dispute with a creditor. It’s worse if you have a late payment or a negative account that was several years old. If the blemish on your record occurred, say, four years ago, it will come off your credit file in another three years. However, if you added a consumer statement subsequent – perhaps just a year ago – then the statement referencing the black mark on your credit will remain another nine years – six more years than the late payment itself was shown!

Hopefully, your credit reports currently indicate: “There is no consumer statement associated with this file,” or something to that effect. If not, you can dispute an existing consumer statement, or simply write a letter to the credit bureaus, and try to get it deleted. For example, TransUnion allows individuals to write a letter to add or remove a consumer statement from their credit reports. To get a consumer statement removed, send a consumer statement removal request, along with your name, address and TransUnion File Identification Number to:

TransUnion Consumer Relations

P.O. Box 2000

Chester, PA 19022

If you write the credit agencies to delete a consumer statement and it doesn’t work, just be prepared to wait it out until any consumer statement you supplied to the credit bureaus eventually expires.

Congress considers a bill that could help your credit report (walletpop.com)
How do I establish my first FICO score? (askthemoneycoach.com)

Can I walk away from my student loan if I can’t afford to pay it off?

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Author: The Money Coach

Q: I Have a School Loan for Me and My Daughter from 1994. I Have Paid Interest Only and Currently the Balance is $68,000+. My Monthly Payment is $375. I Have Deferred Payments at Least Twice the Past 4 Years. What Options Do I Have Other Than Walking Away From the Loan?

A: Unfortunately, student loans aren’t like mortgage debt. You can’t simply “walk away” from student loans — at least not without very, very severe consequences, and not without those loans haunting you, literally, for the rest of your life. You see, student loans have no “statute of limitations.” So your lenders (whether private lenders or the federal government) can come after you and/or your daughter forever to try to collect. Read this article on how to pay student loans fast, and the links on these posts on student loans too, for some ideas about how to eliminate that student loan debt.

Ask The Money Coach

Posts Tagged ‘credit’