Preapproved credit-card offers don't hurt credit scores
Those preapproved credit-card offers that fill many mailboxes on a regular basis won't have an impact on the recipient's credit score unless the offer is accepted.
Q. I have a very good credit rating, so I get two or three letters each week from banks that offer preapproved credit cards. You recently wrote that people who check their credit frequently can lower their score. Are these offers of preapproved cards hurting my score, even though I don't ask for them? I am especially worried because I want to buy my first house later this year, so I want to keep my score as high as possible to improve my chances of getting a mortgage.
A. Congratulations for your outstanding credit score. And, at the risk of tipping off my age, I'll tell you this advice from a 1980s song: Don't worry. Be happy.
Hundreds of banks cull millions of credit-score files every day to find people with the highest ratings so they can offer new cards or loans to top-ranked borrowers. The type of credit inquiries you're asking about is considered a "soft hit" on your report, which should not have any effect on your overall score.
Most types of soft hits involve inquiries that you did not initiate yourself. They include unsolicited credit-card offers and even mortgage offers, such as the ones you're getting now.
The federal Fair Credit Reporting Act states that a bank's inquires cannot affect your score if you refuse the offer of its new card or loan. But if you accept such an offer, your score will certainly be impacted by the way you handle that account in the future.
Conversely, too many "hard hits" on your report - inquiries you personally made to obtain a new loan or credit card - will indeed be recorded by credit bureaus and may affect a lender's willingness to provide you with a mortgage later. Lenders get nervous if they see more than two or three recent hard hits in your credit file, in part because they think that you may have been approved for a loan that has not yet appeared on your report.
Unlike several years ago, banks (thankfully) don't want to overextend credit. But stay on the safe side: Don't apply for any new credit-card accounts or personal loans until the mortgage for your first home is approved later this year.
Real estate trivia: Santa Claus ended 2015 with a "very good" credit-rating of 757 (out of a possible 850), according to a tongue-in-cheek estimate by the company that created the FICO scoring system. Saint Nick got high marks for making prompt payments on the mortgage he supposedly took to expand his toy factory, the company says, as well as the loan on his new hybrid sleigh.
Q. Is it true that apartment tenants who are addicted to drugs or alcohol are protected by housing anti-discrimination laws?
A. In some cases, yes. In other instances, no.
The federal Fair Housing Act bans discrimination based on a person's disability, which it defines as "a physical or mental impairment which substantially limits one or more such person's major life activities." That protection specifically extends to those who are addicted to alcohol or prescription drugs.
That said, the act does not bar discrimination based on a tenant's use of illegal drugs. It's against the law for a landlord to refuse to rent to someone if the rental prospect is hooked on a doctor-prescribed antidepressant, for example, but it's OK to reject an application or start eviction proceedings against someone who uses heroin or is convicted of making or distributing other illicit substances.
Landlords, though, can't pick and choose which rental prospects to ask about their past or current drug use. If an apartment owner or manager asks one tenant about it, he or she must ask them all. Otherwise, it's a violation of the Fair Housing Act.
• For the booklet "Straight Talk About Living Trusts," send $4 and a self-addressed, stamped envelope to David Myers/Trust, P.O. Box 4405, Culver City, CA 90231-4405.
© 2016, Cowles Syndicate Inc.