Hard credit checks versus soft credit checks

When a company reviews your credit, a soft or hard credit inquiry will be performed. The type of inquiry performed can affect your credit. So, it’s important to know the which is being pulled. Soft credit inquiries Soft inquiries do not affect your credit and only you can see soft inquiries on your credit report. Hard credit inquiries Hard inquiries are viewable by anyone accessing your credit report and they affect your credit. When a hard credit check is performed, your total number of hard inquiries is added to your credit report. …

Recognizing the terminology used to request a credit check

If someone is considering extending credit to you, they may view your credit report to analyze your credit history and determine how much credit they’ll extend. Why do variations of the term “credit inquiry” matter? Anyone accessing your credit report will be able to view not only your credit history, but personal details, such as any current (or previous) address, phone number, and employer that has been added to your credit report. So, it’s important that you know when you’re being asked to provide access to such sensitive information. The primary reason for needing …

How secured credit cards work

A secured credit card is a great way for someone to build or rebuild credit if they have a poor credit history or little to no credit history. The main difference between secured credit cards and unsecured credit cards is that a secured card is “secured” or backed by the deposit that you pay. How secured credit cards work Deposits for secured cards can be less than $100 or as high as the thousands. In most cases, the credit limit for your secured card will be 100% of your deposit. So, if you pay …

Handling credit report disputes and complaints

At some point, you may discover a discrepancy on your credit report. You can contact a number of parties to attempt to resolve the matter and get your report updated. Contact the creditor It’s best to contact the creditor first since they provide updates to the bureaus. If the creditor confirms that they’re responsible for reporting the error, the creditor is required to provide the bureau with the correct information. If the creditor feels that they’re not responsible for the error, they will typically refer you to the correct party, which is normally the …

Credit card due dates

According to the Credit CARD Act, your due date must be on the same day each month (for instance, the 7th of each month). In some rare cases, a card issuer may choose to change the payment due date because of business reasons. It’s quite common for issuers to allow cardholders to initiate the request for a change to the due date. However, some issuers do not allow such requests. Consumers who change their due date typically do so because they find it easier to manage their finances. For instance, one might wish to …

Balance chasing and how to limit further adverse action

If a credit card issuer seeks to reduce its risk with a cardholder, the issuer might opt to “balance chase” the customer by lowering the cardholder’s credit limit as the balance is paid down. Impacts of balance chasing If the cardholder was relying on the lost credit line for an upcoming purchase, they may find themselves scrambling to find other payment sources. The cardholder’s credit could also be affected due to the higher utilization rate. Let’s consider the following: The cardholder’s $10,000-limit card has a balance of $2,500 and a utilization rate of 25% …

The score that you need to buy a home

There isn’t a specific minimum score that you must have to get approved for a mortgage. Your credit score is just one factor that lenders use when deciding if, or how much, to lend to you. There are also various loan types, which have different minimum scores, as well. An FHA Loan, for example, requires a FICO score of 580 and a down payment of 3.5%. But, you could still qualify with a score lower than 580 as long as your down payment is 10%. Lenders also have their own thresholds for lending. As an example, …

How to obtain your credit reports for free

Because of the COVID pandemic, each week, you’re able to access AnnualCreditReport.com to obtain three free credit reports (one from each of the three major credit bureaus, which are Experian, TransUnion, and Equifax). The three bureaus initially intended to provide the service until April of 2021, but it was extended to April 20, 2022. Although there are many sites that offer free credit reports, beware that some sites engage in deceptive practices, which include misleading consumers by having site names and URLs similar to AnnualCreditReport.com. You’re encouraged to visit the government’s FTC (Federal Trade Commission) website …

The amount of credit that you need

The amount of credit that anyone needs is subjective and based on personal financial needs and wants. Someone who intends to only use credit as a more secure form of payment (versus debit) and plans to pay off credit card balances each month would need just enough credit to cover their monthly expenses that they plan to pay with credit card. A consumer who uses credit for emergencies would want to secure enough credit to cover such expenses. If you haven’t created a budget and determined how much you would need in the event …