There are two types of inquiries that a bank, credit card company, or other potential loan originator can make on your credit score.

These are called either a “soft hit” (”soft inquiry,” “soft pull” or “soft credit check” are synonymous terms) or a “hard hit.” (again, “hard inquiry,” “hard pull,” and “hard credit check” mean the same thing).

These terms are not official technical terms, but are instead lender jargon used to refer to the groupings of credit inquiries. Any inquiry that was, generally, initiated by someone else and doesn’t necessarily indicate an intention on your part to borrow money is known as the soft hit.

On the other hand, a credit inquiry that does represent a fairly immediate intent to borrow money is known as a hard hit. These are sometimes called voluntary credit inquiries, because you generally initiated them when you went in to apply for a loan.

A soft hit generally does not affect your credit score. These hits occur when a credit card company wants to evaluate your credit score, or when you ask for a copy of your own credit report. Lenders do not see these inquiries when they pull a copy of your credit report, and they do not negatively affect your credit score.

The credit agencies generally consider it a soft hit when a credit agency is verifying information that you gave them by running a credit inquiry. Banks looking at account status are also considered to be soft hits.

A hard hit, however, will negatively affect your score, if only slightly. These hits generally mean you have gone into a lender, filled out an application and have requested credit. If you go to a variety of banks and credit unions to get preapproval from each for a car or home loan, then each inquiry will show up on your credit reports.

These hits negatively affect your credit scores, since the very time that you decide to increase your debt load by borrowing money, you become at least a slightly higher risk for not paying it back. Clearly, if you had no debt, you’d be a great risk for having no problems paying it back.

Because the higher the amount of debt, the more difficult it becomes to repay, the credit agencies adjust your score in advance to reflect this slightly higher risk.

This device, called a Consumer Proposal, is different from bankruptcy, and gives the debtor some significant advantages over bankruptcy or paying the debt back over the full terms of the loans.

The advantages to the consumer with a Consumer Proposal are that:

1. The interest rates on all debt are frozen.

2. The consumer is able to negotiate to repay a portion of what (s)he owes, if the creditor agrees.

3. Creditors are unable to take legal action against you, and the credit bureaus stop calling.

4. Any wage garnishments in place, except those for child support or alimony, are ended immediately.

5. A majority of your creditors must agree to your proposal or it is void. However, if a majority (over 50%) agrees, then all creditors are considered to have accepted.

6. The maximum time period for paying the debt is 5 years.

7. The credit ranking for a consumer proposal is slightly better than that of bankruptcy.

With a consumer proposal, the debt is not eliminated, but is nearly always reduced. The creditor agrees to make payments of a certain amount each month for a specified length of time.

With bankruptcy, the debtor is determined to be insolvent; in other words, owes at least $1,000 and is unable to make payments when they are due.

In the case of bankruptcy, there are limits on the value of personal belongings, household goods, tools for work, farm tools and vehicles that a person in bankruptcy is allowed to keep. If the value of any of these items exceeds the moderate limits set by statute, then the debtor is required to liquidate them and divide the money between the creditors.

Additionally, a bankruptcy involving assets over $10,000 are reported in the newspaper and the mark stays on the creditor’s credit report for seven years.

However, creditors do stop calling, and the debtors are allowed to keep all wages after the filing, allowing them to make a new start.

If the debtor has the ability to make payments under a consumer proposal, it is often a better choice, since creditors can oppose a bankruptcy discharge if a debtor had the means for a consumer proposal and chose not to utilize it.

The affect on the credit score of the debtor is also lower with a consumer proposal.

It is extremely important to regularly get a copy of your credit report from each credit bureau so that you can see if there are any mistakes on those reports.

Even a simple mistake like the wrong address or even the wrong house number on your address can lead you to being turned down for a loan, even if you have fantastic credit.

And with the amount of identity fraud growing, keeping careful oversight of your credit reports and fixing any errors becomes even more important.

Some of the most common errors come as the result of name confusion. The more common your name, the more likely it is that you will have problems of this variety.

People have found accounts listed on records that don’t belong to them, found themselves listed as deceased, found the before noted wrong addresses, and incorrect statistical information such as birth year, etc.

If any of these items disagree with the information on a credit application, it raises a red flag. Often these errors come as the result of a person with a similar name moving, passing away or opening a new account, and the information is mistakenly put on your account instead of theirs.

Even more dangerous are the problems arising from a person who steals your identifying information and uses it to open credit accounts.

To fix an error on your credit report, you must initiate the procedure. You should call or send a certified letter to each of the credit reporting bureaus that show the error. In the case of data entry mistakes, you may need only contact one of the bureaus, but in the case of fraud, you will need to contact each bureau.

In the letter or phone call, you should provide your complete name, current address, date of birth and social security number.

If you dispute your ownership of an account listed on the report, you need to provide the name of the company listed as owner of the disputed item, and the account number that you dispute.

If there is an error is a factual error or error in personal information, note the incorrect information and what the correct entry should be. Make a formal request that they correct the information on the credit report.

Before sending the letter to the bureau, gather any supporting evidence or documentation that might help. Credit bureaus are required to remove any items that cannot be verified and fix any factual errors.

You may have to persistently pursue the bureaus, but they often fix mistakes promptly. When there is a dispute over a record’s accuracy, there may be more difficulty.

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The easy answer to this question is no, your job does not directly influence your credit score. The complete answer to that question may be more complex, however.

For example, in Canada, a person looking for an automobile loan may find that (s)he is evaluated on a variety of factors, including the duration of their current job and the salary they collect.

Salary is definitely also a factor in the U.S. when a credit agency is evaluating whether or not to grant a loan to an individual. All businesses who provide loans examine the debt percentage – how much a person owes compared with how much that person brings to the table in terms of income.

But credit reporting agencies who develop the FICO and other credit scores do not consider salary in their numerical calculations.

In fact, an objection that many have to the credit score is that it is so impersonal, and does not take into account any personal factors, such as an illness in yourself or close family member or the economic conditions in the area where you live.

On the other hand, they are also not allowed (and don’t) to take into consideration any information regarding race, gender, religion, nationality, marital status, age, hometown, interest rates charged, salary, occupation, job title, length of employment or employment history.

Many people consider this good news, since there are often gaps in employment history or decreases in salary over the course of a career, but those who manage to keep their finances in good order through those kinds of challenges are able to maintain credit scores just as high as those who never had such problems.

A credit score may, however, but used when you are looking for a job. Potential employers have begun to use credit scores to determine the relative responsibility of potential hires. It is possible that your potential employer will know about any debt you have, bankruptcy, or poor credit history.

A person who has been responsible in his or her finances is considered a better risk as an employee; since they make the assumption that such a person will also be responsible with the company assets.

While some consider it a difficult thing that landlords, employers and insurance companies may all run credit reports on you before determining your rates or deciding to rent to you, it is true that every business is attempting to lower its risk factors in any way possible, and hiring, renting to, and insuring good credit risks helps lower business risk.

A credit score determines a great deal about whether or not you qualify for a large loan, such as a mortgage or vehicle loan. It tells the lender whether or not you are a good credit risk, if you will likely pay the loaned money back, and if you will care for the property you want to purchase.

While everyone knows that there is a number called a credit score, many are unaware of what a credit score is, how it is calculated and what each type of credit score means.

There are three types of credit score to address today. The first is the most commonly used score, the FICO score.

The FICO score is named after the company that developed the algorithm for the score, the Fair Isaac & Company. Since this company began evaluating credit risk in the 1950s, many lenders have used it widely as a solid way to evaluate the credit risk of a borrower.

Although the neither Fair Isaac or the credit bureaus who rely heavily on the score will reveal exactly how it is calculated, it is well known that certain factors strongly affect the strength of the FICO score, including the following:

· Late payments

· The length of time a person has had a line of credit

· The ratio of credit used vs. amount of credit available (the lower the ratio, the better – don’t max out on credit cards)

· The length of time a person lives in a residence

· Negative credit reports – bankruptcies, charge offs or any other arrangement where the creditor did not receive full payment from the debtor.

The three credit bureaus (TransUnion, Equifax and Experian) each calculate this score separately and come up with unique numbers, although they are generally similar. They do, however, have different names.

For example, the credit score developed by Equifax in conjunction with Fair Isaac is known as the Beacon Score. This score ranges from 300 to 850, and the higher score is more desirable.

Similarly, the Empirica score is the score used by TransUnion. This number ranges from 150 to 934, again, with the higher numbers being preferred.

Experian uses the Fair Isaac score as their standard. This score ranges from 330 to 830.

With any of these credit scores, the company subscribes to the initial algorithms from Fair Isaac & Company, then adds their own version of the FICO score, which yields the different scales.

The best single thing a borrower can do to improve these scores is to pay bills on time.