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I’m writing this blog as quickly as I can. In the past 30 minutes I’ve gotten two questions from two completely different people asking me the exact same question, almost verbatim. That means someone posted something on a blog, in a forum or blasted out an email to a bunch of people…and it’s getting some attention. The question in this case is…
“Is there any truth to the word spreading around that if a borrower opts out of credit offers through the credit repositories, they can typically see a 10-20 point increase in their scores?
This is a fairly minor but irritating credit scoring myth that seems to barely survive year after year despite constant debunking. The issue is whether opting out from receiving pre-approved credit offers improves your credit scores. Opting out, if you’re not familiar, is your right thanks to the Fair Credit Reporting Act. You can go to www.optoutprescreen.com and basically order the credit bureaus to NOT sell you name and address to a credit card issuer wanting to make firm offers of credit. If you do so your amount of junk mail from credit card issuers will be almost completely eliminated.
You can opt out forever or for a shorter period of time. And, you can always opt back in if you really want to start getting pre-approved credit card offers again. But, can opting out really increase your credit scores? The answer is absolutely not.
There is NOTHING on your credit reports that indicates that you’ve opted out. As such, there’s no way a credit scoring model can know that you’ve opted out and cause it to reward you for doing so.
First off, credit scores don’t reward consumers’ scores because of actions like that.There are no “bonus points” just waiting for you to discover, like if credit scoring was JEOPARDY and you just landed on the Daily Double.
Second, the only impact to your credit reports of opting out will be that over time you’ll have fewer soft inquiries. But, soft inquiries have no impact on your credit scores anyway so the volume or number is immaterial.
Still, what about the people who swear that their scores went up after they opted out? Simple coincidence.
It’s as silly as saying, “I brushed my teeth with my left hand instead of my right and my credit went up 5 points so that must mean brushing your teeth with your left hand increases your credit scores, right?”
Whenever I’ve hear this myth I almost always ask “why do you think your scores would go up because you’ve opted out?” I’ve never gotten a good answer to that question.
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Credit Reporting Expert, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, founder of www.creditexpertwitness.com and a Contributor for the National Foundation for Credit Counseling. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. You can follow John on Twitter here.
