soft-credit-check

What Is a Soft Credit Check?

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Whenever you apply for anything—a loan, credit card, etc.—the lender will need to look into your credit report. Called a credit check, there are two kinds of credit checks—hard and soft. Each is used for different reasons and has a different impact on your credit score. Below, find out more about soft credit checks, when and how they're used and why they're beneficial.Whenever you apply for anything—a loan, credit card, etc.—the lender will need to look into your credit report. Called a credit check, there are two kinds of credit checks—hard and soft. Each is used for different reasons and has a different impact on your credit score. Below, find out more about soft credit checks, when and how they’re used and why they’re beneficial.

What Is a Soft Credit Check?

A soft credit check occurs when someone pulls your credit report, but it isn’t used to decide whether to offer you credit. In most cases, soft credit checks are for informational or promotional purposes.

  • Informational soft credit checks. Examples include pulling your own report to see what’s on it, employers pulling it with your permission as part of a background check, and insurance agencies looking at your score to help determine the level of risk you might bring as a client. Some landlords might also run soft checks as opposed to hard inquiries.
  • Promotional soft credit checks. These are typically run by creditors who want to see if they can offer you potential products. For example, if you receive a mailing from a personal loan or credit card company stating you have been prequalified for potential credit, that company has probably run a soft check.

Soft vs. Hard Credit Checks

Soft credit checks are different from hard inquiries. Hard inquiries occur when a lender is making a final decision about whether to lend you money.

Examples of when a hard credit check might occur include:

  • You’re applying for a mortgage, car loan or personal loan
  • You apply for a credit card
  • You ask for new terms on a credit card

Even if lenders have run a soft check to prequalify you, they’ll run a hard check once you officially apply for credit. That’s because a new credit inquiry provides them the most current information and lets them make a final decision about whether they’ll lend you money and at what rates and terms.

Here are a few other differences between hard and soft inquiries:

  • Others who check your credit report can see hard inquires. Only you can see soft inquiries.
  • Hard inquiries have an impact on your credit score. Soft inquiries don’t.
  • Hard inquiries require your approval. Soft inquiries can be run without your knowledge.

Why Does a Hard Inquiry Affect Your Credit When Soft Credit Checks Don’t?

The reason hard inquiries affect your score when soft inquiries don’t is because the number of hard inquiries could suggest that you’re a risk to a potential lender. If you have had dozens of hard inquiries in the past six months, that means you’ve applied to numerous credit opportunities. It can be a sign you’re desperately seeking funds or you’re not managing your financial life well.

Soft inquiries don’t necessarily mean you’re seeking funding. You might be checking your own credit weekly because you’re trying to repair it, for example. Or perhaps you’re on a job hunt and employers are checking your credit during background checks. These don’t reflect on your potential risk as a borrower.

Both hard and soft inquiries remain listed on your credit report for up to two years. Hard inquiries typically affect your score only for the first 12 months, though.

How Do I Run a Soft Credit Check?

You can run a soft inquiry on your own credit by checking your score or getting a copy of your report. Here are a few ways you can do so:

  • Get a free credit score from AnnualCreditReport.com. You have a legal right to receive one free report from each of the credit bureaus every year. Spread them out, ordering one each quarter, to keep an eye on your general credit information throughout the year. Until April 2022, you can get one free report per week per bureau because of measures to help people manage finances during COVID-19.
  • Sign up for ExtraCredit. It lets you see 28 of your FICO scores so you know exactly where your credit stands at any time. You can also use the app to get personalized offers you’re likelier to be approved for given your credit score, which reduces unnecessary hard inquiries that might occur if you blindly shopped around for credit.
  • Sign up for our Credit Report Card. This lets you see how you’re doing in the five major areas that impact your score, which include payment history, credit utilization, credit age, credit mix, and hard inquiries.

Checking your own credit score or reports, including through products such as ExtraCredit, are not hard inquiries. These activities don’t affect your credit.

Sign up for ExtraCredit

Can You Fail a Soft Credit Check?

You don’t necessarily fail a soft credit check. However, the information obtained during that process might cause a company not to reach out to you. For example, if a company offering a travel rewards credit card with a high credit score requirement pulls your score and sees it’s only mediocre, that company might not send you a promotional offer.

In some cases, prequalification via a soft credit check is part of the application process. For example, secured credit cards that cater to people with poor credit often don’t do a full hard inquiry at all. Or they might start with a soft inquiry just to let you know if you should move forward, which is beneficial. If you’re not going to qualify, why go through a hard inquiry that brings your score down?

Can You Remove a Hard Inquiry from Your Report?

Hard inquiries can bring your score down a small amount. Because of that, you definitely want to avoid unnecessary hard inquiries on your report. Luckily, you have to give permission for these types of checks. The Fair Credit Reporting Act also protects your right to accurate information in your credit file.

If you see a hard inquiry on your report that you didn’t approve, you can challenge it. Write a letter to the credit bureau noting you didn’t give permission for the inquiry and asking it to investigate and make appropriate edits to your report.

The Bottom Line on Soft Inquiries

Soft inquiries offer a lot of advantages and almost no disadvantages. They don’t hurt your credit score and can help keep you informed or qualify you for promotional offers. You do want to keep an eye on your reports and who is looking at them to ensure your information is being handled in a safe manner. And if you want to lock down your data for privacy purposes, you can freeze your credit to make soft and hard inquiries impossible without action on your part.

DISCLAIMER. The information provided in this article does not, and is not intended to be, legal, financial or credit advice; instead, it is for general informational purposes only.

7 Good Reasons I Still Carry Cash, Please Don’t Rob Me

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7 Good Reasons I Still Carry Cash - Please Don't Rob Me. #Wallet #Cash #Money #Prepared #Rob How much cash do you keep in your wallet?

We are regularly becoming a cashless society with credit cards and digital transactions becoming the primary forms of money transfer. Even mega-company Starbucks continues to play with the idea of a completely cashless store, only accepting credit cards and mobile apps.

More and more people don’t carry cash anymore. When going out, we take our phone, ID, and credit card. With those, you can pretty much pay for anything. Even then, credit cards are becoming obsolete as phones nowadays can handle most payments.

As people continue their unknowing war on cash. The biggest winners are the four major financial institutions MasterCard, Visa, PayPal and Square. I find myself regularly reminding friends to continue to at least keep some cash on them for the following reasons.

FYI – I keep about $100 in my wallet at all times for these reasons. Again, please don’t rob me. I usually have (3) Twenty Dollar Bills, (2) Ten Dollar Bills, (1) Five Dollar Bill and the rest One Dollar Bills. Always stacked in order so I can quickly grab what I need.

In a cashless society, here’s why you still need cash

1. A Minimum Purchase on Cards – This is probably one of the biggest reasons why everyone should keep some extra cash on them. Most stores require a “minimum credit card amount” usually set at $5 to $10. This is because stores are forced to pay a 1.6% + $0.10 fee to process your credit card. The lower the price, the more it cuts into their profit.

If your store doesn’t have a “minimum credit card amount” it likely means they’re afraid to scare you away and prefer to absorb those extra costs for the extra convenience of their customers. If you don’t have cash, you’ll be required to buy extra things to surpass their minimum $5 or $10 credit card amount, and that’s not frugal.

2. Parking – If you’re frugal, you’re likely willing to park miles away to avoid paying for a parking spot. However, there are times that’s not an option. You’ll need to pay for a spot or worse a valet. If you’re stuck in a situation where a valet is your best option, it’s always easier to have the cash to hand over quickly.

3. When in a rush – There have been a couple of times I’m at a restaurant with coworkers and the server is swamped. The server is trying their best, but everyone is attempting to fit lunch in a 1-hour period. Rather than waiting for the server to process your credit card and return. It’s easier to lay down the cash and return to the office.

4. Soda Machines – It’s impressive to see the number of soda machines that now accept credit cards. However, it’s not yet universal implemented and many machines still only accept cash. In these moments when you absolutely need caffeine, carrying cash is handy!

5. Tipping – I’ve shared my thoughts on tipping before, and I now tip 20% for everything I do. Yet there are many situations, other than restaurants, that tipping is standard and credit card payments may not be an option.

One example was a Bike Bar I recently celebrated with friends (photo below of our Bike Bar). We paid the $234 through their online portal weeks in advance but that didn’t include the tip for our host. After a great trip, we tipped our tour guide with $40 because he went above and beyond. No one had a credit card processing machine on hand, and we didn’t want the extra hassle of finding our host on Venmo or PayPal. So we handed over cash, it’s still the easiest way to transfer money in person.

6. Special Discounts – This relates to #1 with the “minimum credit card purchase”. Many stores offer special discounts to people who pay with cash. This saves the store from paying a credit card processing fee and eating into their profits. Plus you save a few dollars when those savings are passed onto you.

7. When Your Credit Card Breaks – This is a thing. I’ve been at the grocery store many times with my credit card, and the “Chip” unexpectantly fails. Sometimes the card is dirty, sometimes the processing machine doesn’t like the angle of the card. Either way, it’s an embarrassing feeling to hold up a line while a tiny machine angrily honks at you. At times like these, having cash is a quick lifesaver and contingency plan to failing technology. It’s bound to happen, so being prepared helps!

Can you think of any other examples of when you might use cash over a credit card?

Income Report – August, 2016

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As I start ramping Wallet Squirrel back up, I’m reminded that no matter what I do. There are some passive income strategies that keep earning me money. So dear passive income. Thank you.

August-2016,-Dividend-Monthly-Income-Report-Infographic

Let’s talk Double Cash Back Credit Card

During a recent Entrepreneur Meet and Greet in Denver (yes, I go to these). It was pointed by a fellow entrepreneur who read my blog (eek, people read this) that we should clarify good and bad ways to use a credit card.

See, I pay off my entire credit card debt daily, since I paid mine off in 2015. So I treat my credit card like cash. I know that I am going to HAVE to pay it all off the next day so anything that I’m willing to pay cash for, I use credit. Mainly just for the 2% cash back.

It was pointed out though, that some people may not know this difference and could continue their spiral of debt. I’m obviously not condoning this. Only use a credit card if you have good credit card habits. It’s easy to say you’re getting 2% back with a credit card, but things still cost 98%.

Moral of the story. It’s hard to say my 2% Cash Back Credit Card is a sort of passive income. Especially if I’m using it to buy wants like Colorado Rockies Tickets. However, a majority of the time I use my Cash Back Credit Card on purchases I’m going to make anyways, so I consider it passive income.

Monthly Goals (I HATE monthly goals)

I have a bad habit of not liking being told what to do. Once I write something down, I’m telling myself to do something and sometimes that’s a bit much. Especially when the guilt of failing a to-do list is a lot worse than actually accomplishing something. Maybe I’ll rename this “Some things Andrew, could maybe do in the future, if he wants”. Catchy right?

  1. Write 2 posts this month on how to earn additional income. That’s what this site is about and let’s get down to the roots.
  2. Comment on 70 blogs. I came to this number because I have 70 blogs on my “To Read” list. Let me know if you want to be on this list.

How I Just Saved Money On A Parking Ticket

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Last week as I returned to my car, I noticed a small piece of paper sticking out of my car door in a familiar yellow envelope common to Denver’s Parking Division. Not sure why they no longer put them on windshields, but my reaction was the same. F**K. However, I figured out a way to save a little on my ticket!

Background

My day started out so well. I took a little time off work in the morning for a 8:30 am annual dental cleaning. I left the dentist office happy because there was NO CO-PAY. Apparently after talking to a few people, insurances usually cover this, but it was still a good feeling leaving knowing I had nothing to pay. Now I walked back to my car, where I park my car on the road every time I’ve been to this dentist. I’ve parked at this location multiple times before so I was used to nuances of the neighborhood.

However, this particular time as I returned to my car, I found a lovely parking ticket. I discovered that the 2 hour parking sign I always stop at, also noted that the last Wednesday of the month, April through November there was no parking. Just my luck, it was that day. What are the odds? I will note, that this is my 3rd parking ticket ever. So I’m usually pretty good. The cost of this mistake? I had to pay $50.

My Idea

Ok, this isn’t exactly rocket science, but in my rebellious nature I didn’t want to pay $50 for a parking ticket. While I usually can find a special promo code or coupons for most items. I have yet discovered the Denver Parking Division to hold such promotions, so I couldn’t save on their end. I had to save on mine.

I had 3 options. I could pay in person with cash. This would entail going to some sad, and depressing place and deal with someone who hates their job (yes, I base my Parking Division assumptions on movies). I could pay online with PayPal, which would be convenient or I could pay online with a credit card. HA! I used my 2% cash back credit card.

I paid $50, but got $1 (2% cash back) back. So in the end, I paid $49. Yes, it’s a small victory but it’s mine. The little guy can chalk this one up to a win!

How-to-save-money-on-a-parking-ticket

 

Have you figured out any additional ways to save money on parking tickets?

How I earn $25 a month with the Best Cashback Credit Card

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Let me first state credit cards aren’t evil, credit card companies are. Your credit card isn’t going to crawl out one night and go on a Las Vegas spending spree with your ex-girlfriend laughing at you until you get your next statement. No, it’s a tool in your ninja financial tool belt and I’m going to explain how it makes $25 for me each month with the best cashback credit card, and how it can help you too.

Oh you heard me, this is me explaining how to have your credit card make YOU money. 99% of the of time, credit card companies make money off you because they think you’re stupid, well if you’re reading this, you’re not stupid. You want to learn how say ENOUGH and try something different.

My $6,000 Credit Card Debt Past:

Let’s just say I was a moron. I like most people, got their first credit card in college, well Wells Fargo in fact. They told me it was a good investment, they told me it would build my credit. They told me I would earn “points” each time I spent money and I could use those “points” to buy other things. I was going to buy things anyways, so why not earn “points” when I do. Sounds awesome right? I had this bank since high school, I invested my first summer job paycheck with this bank. They couldn’t steer me wrong.

Now I won’t bash Wells Fargo. I think everyone should do their own research and make their own call, but let me tell you what those “points” got me the last 9 years I had/used that credit card.

Keep in mind, this is me using my credit card cautiously, I heard the rumors about people with credit card debt, but everyone had debt. Why should I be different? In fact, I racked up $6,000 in debt for multiple years paying only the minimum (that’s only the interest boys and girls). It’s OK though, had SO many magical “points”. I could buy so much more stuff!

So here’s the thing they didn’t tell me with my “points” credit card.

  • There was a $20 annual membership fee
  • You can only use “points” in their own online store
  • Everything in their limited online store cost more than Amazon
  • Oh, and your points expire

WHAT THE FUCK!!! Did I mention I was a moron? In the last 4 of the 9 years, I kept checking the online market place and the best thing I could buy was a $40 putter. I (like you probably) thought, if I keep using my card, I can save enough points to buy the $50 putter. Wrong, when I checked back, my oldest points had expired. Plus did I mention the $20 annual fee? FUCK!

In the end, after all the debt, I cumulatively used the points (that hadn’t expired yet) on $75 worth of gift cards to Amazon. So in 9 years, I paid $180 ($20 annual fee x9) for $75 worth of Amazon gift cards. Again, I will reiterate, I was a moron.

When I Paid off my Credit Card Debt:

Exactly 1 year ago, I finally had a job that allowed me to pay off my credit card debt. (Hint: I paid off more than the minimum payment each month) Wahoo! I even celebrated by walking into Wells Fargo and giving them back their credit card. A purely ceremonial gesture. Apparently that’s not something most people do, most people just cut them with scissors and throw it away. I recommend this. Wells Fargo actually told me to keep it open and use it for small purchases to continue to “build my credit”. Seriously, the advice Wells Fargo had for me, was to keep this awful credit card open and keep spending money on it. Really? All bow down the mighty credit score.

I decided my credit score was good enough and haven’t used that card since. It’s been 1 year.

Wallet Squirrel - Excitement

I Did Research And Found The Best Cashback Credit Card For Me:

Now with a story like this, once I paid off my credit card debt, you think I would be done with credit cards forever. Right? Well, do you recall me saying credit cards aren’t evil, credit card companies are? I just needed to learn how to use my credit card responsibly and find the right card for me. Credit Cards are a dime a dozen and so they separate themselves by giving you “rewards” for using them. These can be broken into three categories:

Point Rewards: The more money you spend on your credit card, the more “points” you get to buy stuff. These points are only redeemable through their own custom online store and often at a markup or definitely not a discount. Simply, I think this is stupid, my experience has been awful. If you’ve had a positive experience with a “point” system, I’d love to hear about it.

Mileage Rewards: The more money you spend, the more “miles” you earn. So you can essentially earn a free airline trip. This is pretty cool, but you have to watch out for “blackout dates” where there are days you can’t use your points and usually you can only select from a few airlines, but hey free miles.

Cashback Rewards: The more money you spend, the more cash you get back. Spoiler alert, this is what I prefer. Screw points and miles, when I get cash back, I use actual “cash” to buy anything I want on Amazon or buy my own plane ticket. No airline restrictions or “blackout dates”. Cash is King. Here is how I went about finding the best cashback credit card.

Let me say something about Cashback Credit Cards

Pay close attention to the amount you get back for different purchases. Some of the best cashback credit cards will give you 6% for groceries and 1% cash back for everything else. You may rightly think, damn 6% that’s awesome. Do your calculations! Here is what my finances look like with three different cashback credit cards. I used Mint.com to figure out my average spending.

Best Cashback Credit Card - Wallet Squirrel 01

Best Cashback Credit Card - Wallet Squirrel 02

Best Cashback Credit Card - Wallet Squirrel 03

With those numbers, I found the Citi Card Double Cashback to be the best cashback credit card for me. NerdWallet is a good resource for finding different credit card options.

How I make $25 a month with Citi Double Cash Back Credit Card

First and foremost, I never buy anything I can’t pay off at the end of the month. I have my account automatically pay off the entire balance each month, just in case I forget, but using my Mint app it keeps me aware of my remaining balance which I pay daily. I make most of my money by buying camping gear, contacts, new shoes and all those items are only considered 1% cashback from every other credit card, but 2% back with my Citi Cash Back Credit Card which is easily the best cashback credit card for me. Yes, if you don’t buy things, your savings far outway the 2% cashback, but these are for purchases I’m going to buy anyway and that I have budgeted for. It all adds up and $15.40 is just the minimum.

As you can see in my Income Reports, my credit card is my often my number one income producing passive income. This is on average around $25 a month. Most people pay interest on their credit cards, but if you’re smart, you can make your credit card company pay you. Here are the last couple months of additional income from what I consider the best cashback credit card.

Please know I am not paid to sponsor Citi Double Cash Back card, I just found it to be the best cashback credit card for my lifestyle.

In all, since I started with my new credit card in September. I have earned $176.05 in the last 7 months! I have earned money back from purchases I make every day. I don’t have to think about miles or blackout dates or if something is 6% or 3% today. Every purchase I make, I get 2% back. That is pretty unfreaking believable! It’s definitely better than when I used to pay $180 over the last 9 years just to have my old Wells Fargo credit card.

So now I use my credit card for EVERY purchase because I know I will get money back. I will continue to post my progress within my income reports and share exactly how this continues to pay up.

Question: Do you do use credit cards in a similiar way?