Dear Opening Credits,

I received a letter from my national bank to apply for a credit card with a low balance transfer APR of 0% for 18 months. Also, it had a low purchase rate until 2015. I applied for the card online and was immediately denied because I had a bankruptcy filed within a five-year period.

Therefore, I took a hit on my credit report. I felt the card offer was good because it came on the letterhead of my bank and was signed by the cash management vice president. The letter also thanked me for my business and offered me the card because I am a valued customer. After being turned down, I called the bank and asked to speak to the VP. She never returned the call. Another woman I explained my situation to told me they really don't have anything to do with the application and it was Elan Financial.

I said the letter was on the bank's letterhead and signed by your VP. I deal with this bank. I am retired now and on a set income, and at the time of my bankruptcy had lost my job. She told me that I should not worry about my credit score because it was a soft hit and not a hard hit. I found out it was a hard hit.

It has been since August 10 that I have been trying to resolve the hit issue with the bank and nothing has been done. I told them there should be an asterisk on the application letter saying if you filed bankruptcy within five years please DO NOT APPLY. She agreed. Even though I was declined, I just received another application yesterday from the same lender. What can I do now? 

- Linda 

Dear Linda,
I will tell you exactly what you need to do: Stop worrying about this issue immediately. You can't remove what happened, and attempting to do so is not worth one more second of your time.

The letter that you received was just a pre-screened marketing offer. Thousands of them were probably sent to the bank's customer base. They didn't mislead you. It was an advertisement. The term "pre-screened" describes card offers that banks market to their customers based on certain criteria, but doesn't guarantee that you'll be approved for the card.

The "soft pull" that the representative told you about was probably in reference to that initial letter, but it sounds like she did get it a bit mixed up. The fact is, whenever a business checks your credit file, an inquiry is placed on your report. It's a soft pull, and has no effect on your credit rating. Additionally, the bank probably didn't examine your credit carefully. They just asked the credit bureaus to provide them with the names of those who have a certain credit profile, then sent the letters en masse.

If you pursue a credit card or a loan, though, the bank then thoroughly checks your reports and scores to see if you truly qualify. That is called a "hard pull," and it does have a small, temporary impact on your FICO scores (the most commonly used scoring system).

Therefore, when you took the bank up on its offer and tried for the balance transfer, a hard inquiry was placed on your file. But this is nothing to panic about, as it's such a minor scoring factor.

You see, the FICO system takes all the financial information from your credit report and turns it into a numerical score of between 300 and 850. The algorithm weighs some data far more heavily than others. Most weighty is the way you make your payments and your debt-to-credit-limit ratio (also called debt utilization). Together, they comprise a whopping 65% of your score, so they are the ones that you need to focus on.

Length of credit history comes next at 15%, so the longer you have and use credit well, the better your scores will become.

Last are types of credit in use and hard inquiries. These are just 10% each -- a tiny fraction of your score compared to all the rest. Clearly your denied application isn't doing much (if any) damage, so stop fretting and fighting.

What else should you relax about? All the offers your current bank and others send you. Either ignore them or contact Federal Trade Commission to stop the prescreened offers. You can choose a five-year or permanent freeze:

  • Five years: Call 1-888-5-OPT-OUT (1-888-567-8688) or visit optoutprescreen.com.
  • Permanent: Go to optoutprescreen.com, complete a request, then sign and return the Permanent Opt-Out Election form.

Now, if you're truly concerned about your score and want to hike it, concentrate on what's driving it down. It appears that you're carrying debt (otherwise you wouldn't have applied for the balance transfer), so do everything possible to eliminate it. That will not only help your credit rating, but your overall financial health. Don't charge anything until you're at a zero balance. After that, you can pick the card up again. Just pay in full and on time.

As for that bankruptcy, it will continue to affect your report and rating until it can no longer show up, which is 10 years from the filing date. However, the major damage occurs in the first two years, and by adding positive activity to your report, it will be overshadowed by your current behaviors.

See related: FICO's 5 factors: The components of a FICO credit score