Money Blue Book

When you give out permission for others to make an inquiry on your credit report, did you know that the inquiry itself may have a negative impact on your credit score? Not all inquiries are created equal. An inquiry occurs when someone examines your credit history and credit score. While a hard inquiry will hurt your credit score, a soft inquiry will not.

Soft Credit Inquiry v. Hard Credit Inquiry

A soft pull describes an inquiry that does not affect your credit score. Soft pulls, or soft credit checks, frequently occur and oftentimes you may not even be aware of it happening. Each soft pull is noted on your credit history file but they are only for you to see and are not available for lenders to view. Examples of soft credit pulls include:

1. Credit report and score checks that you request yourself.
2. Initial credit checks by credit card companies that want to solicit you for a pre-approved credit card.
3. Initial credit checks by mortgage companies to pre-approve you for a loan.
4. Credit background checks by a potential employer.
5. Periodic credit checks by your insurance or credit card company to keep tabs on you.

A hard pull, or hard credit inquiry, is very different and does negatively affect your credit score. When you give permission for a lender to check your credit history for the purpose of extending credit to you, the lender will make what is known as a hard credit check. A hard credit check is almost always voluntary and is noted on your credit history file by all three credit bureaus for other lenders to see. Hard pull inquiries stay on your credit report for 1-2 years and each hard inquiry can cause a 5 point drop in your credit score for about six months. Examples of hard credit pulls that will affect your credit score include:

1. Applications for a new credit card.
2. Requests to activate a pre-approved credit card offer. Upon your request to activate the pre-approved card, the lender will take a much deeper look into your history and hit you with a hard pull inquiry.
3. Activations of new cell phone contracts.
4. Opening a new bank checking or savings account at some institutions. Many banks and credit unions will do a hard credit pull now when you open a new account with them.

How Do Soft and Hard Pulls Show Up On Your Credit Report

The three credit bureaus, TransUnion, Experian, and Equifax have different names for soft and hard credit pulls, but they operate in the same way. Soft credit pulls are recorded on your credit history file but have no effect on your credit score and are only available for you to see. Hard credit pulls on the other hand will negatively hurt your score and each hard inquiry can be viewed by lenders looking to extend you credit.

Rules of Thumb

You will never hurt your credit score by requesting your own credit history file. But whenever a lender is preparing to extend you credit, they will likely run a hard credit check. Because each hard credit pull hurts your credit score, it is best to keep them to a minimum. Too many hard inquiries will signal to potential lenders that you’ve been seeking loans and lenders may consider you a poor credit risk. If you’re not sure, always ask the bank or lender what type of credit inquiry they will be making on your credit report – whether it will be a soft pull or a hard pull inquiry.

I’ve written and posted a useful eBay Wholesale Guide for all the eBay wannabe powersellers. Many people are making money by selling products through online auctions such as eBay. I myself have sold and made some money by following the advice expressed in the comprehensive guide.

The guide is more for beginners or those who have had only light experience selling products on eBay. The pros probably already have a list of established wholesale sources that they closely guard. Ebay selling is very competitive as auction consumers have severely driven down the prices, but it can be done. I’ve never used it to replace my full time income, but it can be a worthwhile hobby and a way to generate a steady alternate income stream.

I recommend making sure you are familiar with the hazards of selling and buying on eBay first before diving deeper into running an actual eBay business. The world is full of many unscrupulous individuals who will try to take advantage of those who are unfamiliar with the process. Scammers are everywhere so please be cautious. Remember, if it sounds too good to be true, it probably is.

It is important that you are well informed about the ins and outs of eBay before committing to purchases involving larger sums of money. To making money successfully through eBay requires a lot of preparation and work, and competition can be stiff at times, but if you persist you will find the business experience to be very worthwhile and financially satisfying.

The Federal Reserve sets monetary policy largely by targeting the federal funds rate, which is a key short term rate that determines rates for banks, credit card loans, home equity loans, and other types of consumer and corporate loans.

Since the Fed is meeting in a few days to decide whether it will change the federal funds rate, let’s get slightly technical and talk about one of the ways to predict what the Federal Reserve will do

In normal times, the federal funds futures market is usually a good predictor of what the Federal Reserve will do over the next several months. However, times are a bit out of whack right now and there is a growing disconnect between what people are fearing or hoping will happen and what a calmer and less pressured Fed will actually do.

Federal funds futures are contracts that are bought and sold on the Chicago Board of Trade and used mostly by speculators who want to gamble on interest rates. The prices reflected by the futures contracts represent investors and speculators’ collective wisdom (or folly) about where short term interest rates are headed.

What Does the Fed Funds Futures Crystal Ball Suggest?

Based upon Friday, September 14’s market close, the 30 day federal funds futures contract for the October 2007 expiration is currently pricing in a 100 percent probability that the Fed will decrease the target rate by at least 25 basis points from the current 5.25% to 5% at the Federal Open Market Meeting on Tuesday, September 18.

In addition, the 30 day federal funds futures contract is pricing in a 58 percent probability of a further 25 basis point decrease in the target rate to 4.75% (versus a 42% probability of just a 25 basis point rate decrease).

So, the futures are telling us that a cut is a virtual certainty at the Fed’s next meeting and that a greater cut is likely. I would urge caution in relying on the futures contract numbers alone though because the Fed has not indicated that it is leaning towards such a cut and the Fed funds futures market has not always predicted accurate results in the past. Studies have demonstrated that the Fed funds futures market has a relatively high degree of forecast reliability only about 30 days out, so probabilities beyond the next month are also shaky at best as well.

I think it’s time I posted a general liability and privacy disclaimer for this website. I personally find it very unnecessary since most people won’t even bother to read it, but the legal realities of the world dictate that I issue one.

I recently read about this case that happened only a few years ago regarding a lawsuit filed by a company against a well known search engine optimization (SEO) blogger named Aaron Wall alleging unspecified defamation and unlawful publication of trade secrets. The trade secrets claim stemmed from comments made by anonymous third parties on the blogger’s website. The case was ultimately dismissed due to a lack of personal jurisdiction, but the case stands as a stark reminder that bloggers have to be careful.

The reality is that writing and posting work online subjects one to the scrutiny of others. This also applies to comments and postings from third party readers as well. Freedom of speech is a constitutionally protected right that shields many forms of speech from government intrusion, but in the private sector it is often a different matter. Frivolous and threatening lawsuits designed to intimidate are all too often filed by parties in bad faith. Therefore, under this context, it is better to be safe than sorry.

I do not want readers to execute trades or take actions based solely on my advice. Please always carefully read the fine print before signing contracts and always conduct your own due diligence. You should not regard any information that I’ve provided as professional legal or financial advice. Remember that the terms and conditions for financial instruments such as credit cards and bank accounts frequently and do change, so please be aware of that. I try my best to provide accurate information, but occasionally I may miss something.

The official disclaimers will be up shortly.