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Do you have any evidence of the former example? My understanding was that this would generate soft searches, which should not impact your score. On the latter

Do you have any evidence of the former example? My understanding was that this would generate soft searches, which should not impact your score. On the latter example, would you lend vast sums of money to someone who has never demonstrated their ability to manage and repay a loan?

TheHypnotist 6y ago
One example: They give you a window for shopping Mortgage rates so that you only have 1 inquiry impacting your score. Outside of that window, other inquiries will impact your score.
macNchz 6y ago
Mortgages and car loan pre-approvals definitely involve a hard pull—but the effect is temporary and only a few points, so it is still very much worth shopping around for the best rate. AFAIK some credit cards will let you do a soft pull to see if you would be approved, but still need a hard inquiry before opening the account.
yardie 6y ago
I have 3 hard pulls on my account. I was looking at buying a car so got pre-approved by my bank (1). The dealer pulled (3) more figuring they could get me a better rate, and a fat commission for them. My score dropped 30 points over the next few months as the hard pulls started to show up. > would you lend vast sums of money to someone who has never demonstrated their ability to manage and repay a loan? Banks seem very comfortable lending it to guys who talk the talk regardless of their ability to repay. Hell we have on such trickster in the whitehouse, now. These rules only apply to the rich and the upper-middle class (the ones who really caused the financial loan industry to collapse in 2008).
cactus2093 6y ago
"Soft searches", i.e. what you see from credit karma or what even your bank might show now when you log into their website, are just estimates of your score. In fact there really is no "your score", the only way to know if you'll be able to be approved is to apply for the loan which requires a hard pull and the lender will interpret the report however they want and translate it to their own version of your score that you'll be evaluated on. It's very common that credit karma will show a decent score, and then when the person applies for a loan or mortgage the score the lender uses comes up much lower and they get denied, and there's little they can do about it except try again later and hope the number went up. > On the latter example, would you lend vast sums of money to someone who has never demonstrated their ability to manage and repay a loan? I think this is a misunderstanding of the role of debt in the world today. Access to debt is all but a necessity to have any hope of financial stability. Prices of large costs like housing and college tuition have increased in massive surplus of the average person's ability to pay for them, which in many ways is a huge problem in and of itself, but the only way the system even sort of still works is easy access to debt. In these circumstances it really doesn't make sense to just shrug it off and let some people fall through the cracks with no recourse because the antiquated and opaque system didn't approve them.
- owenmarshall 6y ago
  > It's very common that credit karma will show a decent score, and then when the person applies for a loan or mortgage the score the lender uses comes up much lower and they get denied, and there's little they can do about it except try again later and hope the number went up. It goes beyond "there is no 'your score'" – there are absolutely credit scores that really matter, it's just the overwhelming majority of people who monitor their "score" from a free monitoring site are looking at something that may be at best a poor simulation of that score. From what I've learned from a friend who did banking software development for decades: almost every lender pulls a FICO score from all three reporting agencies, discards the high and low, and uses the middle score to make their lending decision. In some cases lenders go out of their way to avoid building in manual underwriting because the score is typically quite accurate and manual underwriting allows bias to enter the system that may open up fair lending/housing lawsuits. Credit Karma doesn't provide a FICO score. Most places that give you "free credit scores" don't. My friend says they jokingly call this a FAKO – a fake FICO. It means next to nothing because they tend to be based on an alternative model like VantageScore that isn't what lenders use to make decisions. If you want a real FICO score, you can buy them from myfico.com and get them from all three bureaus, or you can get a credit card that gives you one: all Discover cards give a monthly FICO 8 from TransUnion and AMEX gives a FICO 8 from Experian (not sure if it's all the cards, and don't go to the "give my credit score" link on their site – you have to find the link to your FICO score) His tl;dr: "a site that tells you your credit score means nothing, a site that tells you your FICO score means a great deal".
- kbutler 6y ago
  > Prices of large costs like housing and college tuition have increased in massive surplus of the average person's ability to pay for them, which in many ways is a huge problem in and of itself, but the only way the system even sort of still works is easy access to debt. Easy access to debt financing drives up those prices. If people can't afford purchases w/o incurring debt and loans aren't available, prices would fall. Instead, you're advocating making it easier for people take loans that exceed their ability to pay? That's not rational from either a borrower, a lender, or a systemic perspective.
- andoriyu 6y ago
smt88 6y ago
> would you lend vast sums of money to someone who has never demonstrated their ability to manage and repay a loan? Yes, of course. I don't think paying off a loan requires practice. You don't become more trustworthy or responsible just because you borrow money. In fact, someone without loans (and high income) suggests they take loans seriously and don't want to live riskily.
triceratops 6y ago
> would you lend vast sums of money to someone who has never demonstrated their ability to manage and repay a loan Depends on what they're borrowing for. If it's real estate, the valuation is solid, and the borrower has a reliable income, why not? They're obviously either well-resourced or financially responsible or both, since they've previously never needed a loan. That plus the existence of an underlying asset that can be taken back sounds like a low risk deal for the bank. Also, don't mortgage applications look at your savings and other assets when lending? It's not just the credit score right?

TheHypnotist 6y ago

One example: They give you a window for shopping Mortgage rates so that you only have 1 inquiry impacting your score. Outside of that window, other inquiries will impact your score.

macNchz 6y ago

Mortgages and car loan pre-approvals definitely involve a hard pull—but the effect is temporary and only a few points, so it is still very much worth shopping around for the best rate. AFAIK some credit cards will let you do a soft pull to see if you would be approved, but still need a hard inquiry before opening the account.

yardie 6y ago

I have 3 hard pulls on my account. I was looking at buying a car so got pre-approved by my bank (1). The dealer pulled (3) more figuring they could get me a better rate, and a fat commission for them. My score dropped 30 points over the next few months as the hard pulls started to show up. > would you lend vast sums of money to someone who has never demonstrated their ability to manage and repay a loan? Banks seem very comfortable lending it to guys who talk the talk regardless of their ability to repay. Hell we have on such trickster in the whitehouse, now. These rules only apply to the rich and the upper-middle class (the ones who really caused the financial loan industry to collapse in 2008).

cactus2093 6y ago

"Soft searches", i.e. what you see from credit karma or what even your bank might show now when you log into their website, are just estimates of your score. In fact there really is no "your score", the only way to know if you'll be able to be approved is to apply for the loan which requires a hard pull and the lender will interpret the report however they want and translate it to their own version of your score that you'll be evaluated on. It's very common that credit karma will show a decent score, and then when the person applies for a loan or mortgage the score the lender uses comes up much lower and they get denied, and there's little they can do about it except try again later and hope the number went up. > On the latter example, would you lend vast sums of money to someone who has never demonstrated their ability to manage and repay a loan? I think this is a misunderstanding of the role of debt in the world today. Access to debt is all but a necessity to have any hope of financial stability. Prices of large costs like housing and college tuition have increased in massive surplus of the average person's ability to pay for them, which in many ways is a huge problem in and of itself, but the only way the system even sort of still works is easy access to debt. In these circumstances it really doesn't make sense to just shrug it off and let some people fall through the cracks with no recourse because the antiquated and opaque system didn't approve them.

owenmarshall 6y ago
> It's very common that credit karma will show a decent score, and then when the person applies for a loan or mortgage the score the lender uses comes up much lower and they get denied, and there's little they can do about it except try again later and hope the number went up. It goes beyond "there is no 'your score'" – there are absolutely credit scores that really matter, it's just the overwhelming majority of people who monitor their "score" from a free monitoring site are looking at something that may be at best a poor simulation of that score. From what I've learned from a friend who did banking software development for decades: almost every lender pulls a FICO score from all three reporting agencies, discards the high and low, and uses the middle score to make their lending decision. In some cases lenders go out of their way to avoid building in manual underwriting because the score is typically quite accurate and manual underwriting allows bias to enter the system that may open up fair lending/housing lawsuits. Credit Karma doesn't provide a FICO score. Most places that give you "free credit scores" don't. My friend says they jokingly call this a FAKO – a fake FICO. It means next to nothing because they tend to be based on an alternative model like VantageScore that isn't what lenders use to make decisions. If you want a real FICO score, you can buy them from myfico.com and get them from all three bureaus, or you can get a credit card that gives you one: all Discover cards give a monthly FICO 8 from TransUnion and AMEX gives a FICO 8 from Experian (not sure if it's all the cards, and don't go to the "give my credit score" link on their site – you have to find the link to your FICO score) His tl;dr: "a site that tells you your credit score means nothing, a site that tells you your FICO score means a great deal".
kbutler 6y ago
> Prices of large costs like housing and college tuition have increased in massive surplus of the average person's ability to pay for them, which in many ways is a huge problem in and of itself, but the only way the system even sort of still works is easy access to debt. Easy access to debt financing drives up those prices. If people can't afford purchases w/o incurring debt and loans aren't available, prices would fall. Instead, you're advocating making it easier for people take loans that exceed their ability to pay? That's not rational from either a borrower, a lender, or a systemic perspective.
andoriyu 6y ago

smt88 6y ago

> would you lend vast sums of money to someone who has never demonstrated their ability to manage and repay a loan? Yes, of course. I don't think paying off a loan requires practice. You don't become more trustworthy or responsible just because you borrow money. In fact, someone without loans (and high income) suggests they take loans seriously and don't want to live riskily.

triceratops 6y ago

> would you lend vast sums of money to someone who has never demonstrated their ability to manage and repay a loan Depends on what they're borrowing for. If it's real estate, the valuation is solid, and the borrower has a reliable income, why not? They're obviously either well-resourced or financially responsible or both, since they've previously never needed a loan. That plus the existence of an underlying asset that can be taken back sounds like a low risk deal for the bank. Also, don't mortgage applications look at your savings and other assets when lending? It's not just the credit score right?