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About Regan Shinski
Expertise
I can answer questions on collections, repossessions, bankruptcy, credit repair, credit counseling, FICO scores, credit planning, and the cause and effect of credit related decisions. I can also answer questions on collection settlements and preparing to sue your creditors for false debts and credit credit reporting.

Experience
Fifteen years ago I was financially devasted due to severe health issues. I filed bankruptcy, had a foreclosure, car repossession, tax lien, and ruined credit. I immersed myself in credit law. I settled dozens of accounts and had them removed to improve my credit. I personally sued four creditors and collection agencies and won cash settlements for their false reporting on my credit reports. Since then, I have completely recovered and have nearly $100,000 in revolving credit lines and perfect credit. I have owned a credit repair company for the past five years and have an additional three years of specific work in the collections and debt management industry. I am fully versed in the Fair Debt Collection Practices Acts (FDCPA), Fair Credit Reporting Act (FCRA), and have used them successfully in collection settlements and lawsuits for myself and others. I am also familiar with and abide by the Credit Repair Organizations Act (CROA). I have deleted or helped delete literally hundreds and hundreds of derogatory items from consumers' credit reports and helped negotiate many settlements with collection agencies and creditors. I have also advised people on bankruptcy at any stage. In the current credit market, I have successfully advised numerous people on how to obtain credit and how to negotiate for better terms.

Education/Credentials
BA University of Minnesota

You are here: Experts > Business > Corporate Law > Collections Law > credit application with my bank for visa

Collections Law - credit application with my bank for visa

Expert: Regan Shinski - 11/3/2009

Question
QUESTION: I received in the mail an offer to apply for a credit card from my bank. It says "You have been pre-selected and have earned Visa Platinum, only our most qualified customers are pre-selected for this card" and "Your excellent credit history means this offer is easy for us to make." I called and applied (I wrote you recently and you suggested I add another credit to my thin file) but later I called back and asked how they know if I have an "excellent credit history" if they haven't checked it yet? He said the criteria to pre-qualify is different than to qualify, but he didn't know what it was. So I don't know what criteria they're used to pre-qualify me or what 'excellent credit' they are referring to. Do you know and how can they tell people they have excellent credit before they even pull it, isn't that lying or at best misleading? One more thing please, do you think I have a good chance of being approved since it is my bank contacting me with all those comments? I don't want to get my hopes up too much. Thanks

ANSWER: Hi Lee:

There are two types of credit inquiries: a hard inquiry and soft inquiry. A hard inquiry is the full credit report that most people think of. This shows everything including specific accounts, balances, and payment histories. A hard inquiry has a very minor negative effect on your credit score. Creditors need a "permissible purpose" to get this report. This is typically a credit application or an account with that creditor.

A soft inquiry can be purchased by creditors directly from the credit bureaus. They do NOT affect your credit score. They only give general information such as the number of accounts, total balances, and number of derogatories and sometimes the score itself. They do NOT include specific accounts and histories only general information.

Creditors use this soft inquiry information to send out the application offer you received. The letter you received is fairly common and just means you met their initial requirements for credit. For example, let's say a creditor will not issue credit to anyone reporting a bankruptcy. A soft inquiry will show that there is no bankruptcy, therefore you may get their application offer in the mail. However, it may not reflect that you just had three late payments on one account that will result in a decline if you formally apply. It is almost guaranteed that if you read the fine print it will say the final determination will be based on your "credit worthiness" or similar statement. This means that upon application, they will complete a hard pull and make their decision at that point.

It is impossible for me to say what your chances of approval are. Different lenders send those out under different circumstances. Some of them can be deemed nothing more than a junk mail letter asking you to apply and others are rigid - only sending them to really strong contenders for credit approval. It's really hit and miss.

Good luck,
Regan

---------- FOLLOW-UP ----------

QUESTION: Ok, thanks. You said that a hard inquiry has a very minor negative effect on the credit score. If they decline me credit, is that still the case or would my score go down even more?

Answer
It is the case whether or not you are approved. The action of the hard inquiry is the process that affects your score. It is typically a very SMALL portion of your score. It's in a category that in TOTAL is only ten percent of your score. The theory is people that are applying for a LOT of credit must be in financial straights and therefore are potentially a higher credit risk. You generally need many credit inquiries to really affect your score to the point of it really being an issue. Inquiries stay on your reports for two years. You should only apply for credit that you need. If you do that, you should be okay. Don't be afraid on that issue alone.

Good luck,
Regan

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