Credit Reports: An In-Depth Look at Soft Inquiries
With consumers more in tune with their credit scores and credit history than ever before, it is important to take a closer look at the benefits and impact of scoring with the use of credit-based tools. In a billing or collection effort it is commonplace to benefit from viewing a consumer’s credit file and utilizing credit-based scoring to prioritize work effort throughout the collections cycle. But what does that mean to the consumer
Here is where a key distinction comes in play. There are actually two types of inquiries that can be made when reviewing a consumer’s credit file or obtaining a credit-based score. First is a “Hard Inquiry”, which is viewable by anyone seeing that consumer’s credit file. The Hard Inquiry is typically utilized when a consumer applies for a loan, credit card or cell phone; that process of requesting credit does impact a consumer’s credit score negatively. The alternative, or “Soft Inquiry”, allows creditors to view a consumer’s credit file and obtain scoring information without negatively impacting the credit score. One typical use of a Soft Inquiry occurs when creditors seek to grant a “Pre-Approved” credit card to a consumer. That Soft Inquiry is visible only by the consumer, not other creditors or perspective creditors pulling the credit file. With no negative impact to the credit score, the impact to consumers is minimal and obtaining the credit information is very helpful to the collection process.
Utilizing the Soft Inquiry allows us to determine a given consumer’s financial situation and history of debt repayment as well as propensity to repay their debts in the future. Each of the three major credit reporting agencies has incorporated their credit data into various scoring models. They allow for the data to be purchased without a negative impact to the consumer, assisting in billing and recovery efforts throughout the life of the receivable. As there is no negative impact to the consumer, utilizing this method serves as useful tool in recovery efforts without concerns of reputational impact from consumer complaints.
To learn more about how credit-based scoring can impact your recoveries, contact your Sales or Client Service Executive.
About State Collection Service, Inc.
Since 1949, State Collection Service has provided quality collection service to countless healthcare organizations.
Through experience and innovation, State Collection Service has grown to become a tremendously credible and nationally-recognized collection agency offering services from pre-registration to bad debt. It is upon the basis of ethical behavior and a dedication to integrity that each State Collection Service employee works to uphold the company’s vision – Partnerships for a Lifetime.