Tag Archives: wealth

Inquiring minds would like to know

The Difference Between Hard and Soft Credit Inquiries - Rich Money

Credit is a topic that has several different facets that make it up. One factor that makes up a credit score (as much as 10 percent) is an inquiry. An inquiry is the beginning stage of beginning a new line of credit and shows how one is looking to seek a new line of credit.

A credit inquiry is a request by an institution for credit report information from a credit-reporting agency. Credit inquiries can be from all types of entities for various reasons, but they are typically made by financial institutions. They are classified as either a hard inquiry or a soft inquiry. Hard inquiries are a key part of the underwriting process for all types of credit. Soft inquiries help credit companies to market their products and can be used to help consumers and are good for reviewing with customers/clients.

Hard inquiries are requested from a credit bureau whenever a borrower completes a new credit application. They are retrieved using a customer’s Social Security number and are required for the credit underwriting process. Hard inquiries provide a creditor with a full credit report on a borrower. This report will include a borrower’s credit and details on their credit history. These are typically displayed on a credit report for approximately 24 months before falling off. Hard inquiries can be harmful to a borrower’s credit score. Each hard inquiry usually causes a small credit score to decrease for a borrower. Hard inquiries remain on one’s credit report for two years. Generally, a high number of hard credit inquiries in a short period of time can be interpreted as an attempt to substantially expand available credit, which creates higher risks for a lender. Hard inquiries can be harmful to a borrower’s credit score. Each hard inquiry usually causes a small credit score to decrease for a borrower. Hard inquiries remain on one’s credit report for two years. Generally, a high number of hard credit inquiries in a short period of time can be interpreted as an attempt to substantially expand available credit, which creates higher risks for a lender, usually within a window of 14-45 days. For those unable or unwilling to wait two years and who are comfortable paying a small fee, one of the best credit repair companies might be able to get the hard inquiries removed from a credit report sooner. In some instances, hard inquiries also may be used for situations other than a credit application. An employment background check and a lease rental application are two instances in which a hard inquiry also may be required. In some instances, hard inquiries also may be used for situations other than a credit application. An employment background check and a lease rental application are two instances in which a hard inquiry also may be required.

Soft inquiries are not included in a credit report. These inquiries can be requested for a variety of reasons. Credit companies have relationships with credit bureaus for soft inquiries that result in marketing lists for potential customers. These soft inquiries are customized by the credit company to identify borrowers who meet some of their underwriting characteristics for a loan. Credit-aggregating services also use soft inquiries to help borrowers find a loan. These platforms require information about a borrower, including their Social Security number, which allows for soft inquiries and prequalification offers. Many lenders also will provide a borrower with quotes through a soft inquiry request that can help them understand potential loan terms. Personal credit reports are also obtained through soft inquiries. Individuals have a right to obtain free annual credit reports from credit reporting agencies that detail their credit information. Individuals can also sign up for free credit scores through their credit card companies. These credit scores are reported to borrowers each month and are obtained by the credit card company through a soft inquiry.

Inquiries are an indicator of what makes up a credit score as well as seeking out new credit. The small components that make up something that most people shy away from are an integral part of your overall credit score. Given this new information may you have a better understanding of how this helps in shaping your credit history for future purchases. Until the next time dear reader. Excelsior!

Trust funds baby!

Trust - Should I create one? A NYC Guide - Regina Kiperman, RK Law PC

In my last post on estate planning, I discussed what a beneficiary was and what it does. This time I will continue with my series on personal finance in regard to another topic when it comes to future planning. We often hear the term trusts, trust funds, and maybe even the term “trust fund baby”; what exactly is a trust? Let’s explore what a trust is and what it does. I’m also going to be using more of the legal definition with some paraphrasing along with some links for certain terms for easier reading.

A trust, per the diction definition, is a fiduciary relationship in which one party, known as a trustor, gives another party, the trustee, the right to hold title to property or assets for the benefit of a third party, the beneficiary. Trusts are established to provide legal protection for the trustor’s assets, to make sure those assets are distributed according to the wishes of the trustor, and to save time, reduce paperwork and, in some cases, avoid or reduce inheritance or estate taxes.

Trusts are created by settlors (an individual along with their lawyer) who decide how to transfer parts or all of their assets to trustees. These trustees hold on to the assets for the beneficiaries of the trust. The rules of a trust depend on the terms on which it was built. In some areas, it is possible for older beneficiaries to become trustees. For example, in some jurisdictions, the grantor can be a lifetime beneficiary and a trustee at the same time.

A trust can be used to determine how a person’s money should be managed and distributed while that person is alive, or after their death. A trust helps avoid taxes and probate. It can protect assets from creditors, and it can dictate the terms of an inheritance for beneficiaries. The disadvantages of trusts are that they require time and money to create, and they cannot be easily revoked.

There are several different kinds of trusts: living trusts which distribute assets while a person is alive and transfer to beneficiaries upon death. Revocable trusts can be changed during the trustor during their lifetime. Irrevocable trusts are unable to be changed once set even if the trustor is still alive and after death. Depending on a person’s needs a trust can be set up however they wish. Trusts have many purposes: privacy for distribution of assets, estate planning, tax planning, and the list goes on.

And there you have it dear readers, a quick and simple explanation of what trusts are and different things they do. I hope this abridged walkthrough sheds more light on a complicated topic. Until the next time dear reader, excelsior!