A hard inquiry occurs when you seek to obtain credit. This happens when you apply for a loan or credit card, for example. Each time you fill out a credit card application at a department store, the inquiry counts as a hard inquiry. Only you can authorize a creditor to perform a hard inquiry on your credit report.

A prospective lender or other creditor will likely be concerned with an applicant whose credit report shows a high volume of hard inquiries. That’s because it suggests a carefree attitude in applying for credit or an effort to borrow excessively.

Borrowing too much — a situation called over-leveraging — is a potential red flag for creditors. It signals you may face more difficulty in repaying your debts in cash-strapped times than a person who judiciously applies for credit. If you’re going to ping your credit report with frequent hard inquiries, it may be best to concentrate them around the time you apply for a home or auto loan.

Fair Isaac, which designs credit-scoring software and sells consumers copies of their credit scores, suggests that your credit score is less likely to be impacted by a concentration of hard inquiries around such circumstances.

A soft inquiry is one where the inquiry is not tallied on your credit report. A soft inquiry does not constitute a bona fide request for credit. For example, a soft inquiry occurs when you obtain a copy of your report.

A soft inquiry also occurs when a company gathers potential marketing information about you based on your credit report. You can opt out of these kinds of inquiries. The Fair Credit Reporting Act entitles you to contact each or all of the major credit bureaus and request them to stop sending you card solicitations and related offers. For more information, call 888-5OPTOUT (567-8688).

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These third worlders did the same to my business card. It’s called a TEASER rate w/ all the bells and whistles. Give me a card w/a 10,000 $ limit,,, when I get to a 7500$ ballance, extend my credit line another 15,000$ making it a 25,000$ limit. Wait for me to be TWO(2) days late on a payment – ONE(1) time and hello 29.9%!!!!! They know exactly what they’re doing.

Thier trying to chop away at us by HENPECKING us with thier fly-by-night finiancial institutions. Where do you suppose they got thier start up $$ to get in this game?? hummmm. And as far as customer service- there is none. SMOKE and MIRRORS. Guess what ADVANTA- like I tell your un-American callers (when I can accually understand what they’re saying) – You will be paid after all my other creditors that have worked with me through these challenging times for businesses.

Let’s do the math on payback. $23,000 @ 29.9% Na-never mind. I’m never making another payment. I guess you’ll have some explaining to do to osamah. I think everybody that share’s any of these issues should STIFF-EM and run them out of Dodge. I’m done. I can’t wait to start getting thier call’s. I’m Excited. Where are all the class action suits?

Oh, they are going—going down! So many complaints can not all be
wrong about the same institution. There is a dramatic difference
between advanta and their C.S.R’s compared to ALL of my other
creditors. They have brought this all on themselves. So yeah- “Go
Advanta” –and keep going down, down, down- just like your stock.

– Google Finance Comment on Advanta

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A negative credit rating is often considered undesirable to lenders and other extenders of credit for the purposes of loaning money or capital.

In the U.S., a consumer’s credit history is compiled by consumer reporting agencies or credit bureaus. The data reported to these agencies are primarily provided to them by creditors and includes detailed records of the relationship a person has with the lender. Detailed account information, including payment history, credit limits, high and low balances, and any aggressive actions taken to recover overdue debts, are all reported regularly (usually monthly). This information is reviewed by a lender to determine whether to approve a loan and on what terms.

As credit became more popular, it became more difficult for lenders to evaluate and approve credit card and loan applications in a timely and efficient manner. To address this issue, credit scoring was adopted.

Credit scoring is the process of using a proprietary mathematical algorithm to create a numerical value that describes an applicants overall creditworthiness. Scores, frequently based on numbers (ranging from 300-850 for consumers in the United States), statistically analyze a credit history, in comparison to other debtors, and gauge the magnitude of financial risk. Since lending money to a person or company is a risk, credit scoring offers a standardized way for lenders to assess that risk rapidly and “without prejudice.” All credit bureaus also offer credit scoring as a supplemental service.

Credit scores assess the likelihood that a borrower will repay a loan or other credit obligation. The higher the score, the better the credit history and the higher the probability that the loan will be repaid on time. When creditors report an excessive number of late payments, or trouble with collecting payments, the score suffers. Similarly, when adverse judgments and collection agency activity are reported, the score decreases even more. Repeated delinquencies or public record entries can lower the score and trigger what is called a negative credit rating or adverse credit history.

Your credit score is a number calculated from factors such as the amount of credit outstanding versus how much you owe, your past ability to pay all your bills on time, how long you’ve had Bad Credit Cards, types of credit used and number of inquiries.The three major consumer reporting agencies, Equifax, Experian and TransUnion all sell credit scores to lenders. Fair Isaaac is one of the major developers of credit scores used by these consumer reporting agencies.

The complete way in which your FICO score is calcualted is complex. One of the factors in your Fico score is credit checks on your credit history. When a lender requests a credit score, it can cause a small drop in the credit score. That is because, as stated above, a number of inquiries over a relatively short period of time can indicate the consumer is in a financially difficult situation.

Consequences

The information in a credit report is sold by credit agencies to organizations that are considering whether to offer credit to individuals or companies. It is also available to other entities with a “permissible purpose”, as defined by the Fair Credit Reporting Act. The consequence of a negative credit rating is typically a reduction in the likelihood that a lender will approve an application for credit under favorable terms, if at all.

Interest rates on loans are significantly affected by credit history—the higher the credit rating, the lower the interest while the lower the credit rating, the higher the interest. The increased interest is used to offset the higher rate of default within the low credit rating group of individuals.

In the United States, in certain cases, insurance, housing, and employment can also be denied based on a negative credit rating.

Note that is not the credit reporting agencies that decide whether a credit history is “adverse.” It is the individual lender or creditor which makes that decision, each lender has its own policy on what scores fall within their guidelines. The specific scores that fall within a lender’s guidelines are most often NOT disclosed to the applicant due to competitive reasons. In the United States, a creditor is required to give the reasons for denying credit to an applicant immediately and must also provide the name and address of the credit reporting agency who provided data that was used to make the decision.

More than One Credit History Per Person

In some countries, people can have more than one credit history. For example, in Canada, although most Canadians are not aware of it, every person who applied for credit before obtaining a Social Insurance Number has two separate credit histories, one with SIN and one without SIN. This is due to the credit reporting structure in Canada. This can lead to two completely separate parallel histories, and often leads to inconsistencies (although typically the person in question will never notice the inconsistencies).

When a lender asks for someone’s credit report with SIN, what the lender gets is different from what he would have gotten if he asked the report without providing the SIN. This is because, contrary to popular belief, when someone gets a new SIN for whatever reason, the two credit files are never merged unless the person requests specifically. As a result, a record with SIN zeroed out is kept separately from a record with SIN. Note this happens without the person even knowing it.

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