The next time you watch one of the slick commercials from Capital One asking "What's in your wallet?", keep in mind that there's no need for them to ask -- they already know.
The credit card issuer is famous for constantly checking consumer credit reports in the hopes of finding new borrowers which it can bombard with its credit offers, or luring credit card customers away from their current lender with better terms.
People who have never held a Capital One card or ever done business with the Virginia-based company regularly report finding multiple "inquiries" from it on their credit reports.
Allan of Birmingham, Alabama, wrote ConsumerAffairs.com to complain about the many appearances of Capital One on his credit report.
"Capital One Bank has been making inquiries on my credit without my permission ... they are doing this every month sometimes two times a month for almost a full year," he said. "I do not have, nor have I ever had, any loans or credit cards with Capital One."
Capital One and other lenders get this information from the three major credit bureaus -- Experian, Equifax, and Trans Union.
The bureaus collect lending data and histories on consumers, and sell them to other lenders, who then evaluate the borrowers' data in a process called "prescreening."
If the consumer meets the lenders' standards, the consumer is the "lucky" recipient of a shower of glossy mailings with offers of new credit, rewards, and other bonuses.
The astounding level of consumer debt in America means that it's tough for credit card companies to gain new customers, as everyone's maxed out or cutting off the plastic addiction altogether. So companies compete fiercely to lure existing card debtors from one lender to another.
To profit from this level of "churn," companies like Capital One will bombard credit reports looking for any potential signs that a consumer is willing to take on more debt.
Soft Sell and Hard Buy
Savvy consumers are aware that there are two types of inquiries involved in credit reports.
A hard inquiry is when you apply for credit of some kind, and the potential lender "pulls" your credit report from one or more of the Big Three bureaus to determine your creditworthiness. Making too many applications for credit at one time can damage your credit score, as it is seen as a sign of carelessness or potential financial trouble.
A soft inquiry is when lenders prescreen your credit history as a potential new customer. Soft inquiries show up on your credit report, but generally don't affect your credit history or credit score, as it is not you making the inquiry, but someone who's interested in you.
Because there's no limit to how many times a lender can make a soft inquiry on a credit report, lenders such as Capitol One can blitz your record as often as they wish, and fill up your mailbox with offers you don't want.
A writer on frequent flyer bulletin board FlyerTalk.com lamented Capitol One's assault on their mailbox.
"We have each received (and this is NOT an exaggeration) at least one invitation every week for at least the last three months," he said. "It is truly aggravating. If you combined all the other credit card advertising mailings we've ever received they would not come close to matching the volume of the Capitol One mailings."
Although soft inquiries are not supposed to harm your overall credit rating, credit reporting bureaus are notorious for inaccurate listings of data, mixing up personal histories, and failing to report changes that could benefit consumers while preserving old or incorrect negative information, such as listing soft inquiries as hard inquiries that could lower a credit score.
This could be what happened to ConsumerAffairs.com reader Eric, of Tucson, Arizona.
"I noticed my monthly loan interests going up dramatically for no reason that I could identify," he said. "Further investigation showed that Capital One had queried my credit reports on a monthly basis. After enough queries had accumulated, and my credit score lowered, I ended up paying big money to my creditors who raised interest based on the lowered credit score caused by Capital One," Eric wrote.
Although you can't completely stop the stream of information on your credit history to lenders and other agencies, you can shut down the "prescreened" credit offers that flood your mailbox.
Under the terms of the Fair Credit Reporting Act (FCRA), the credit bureaus are obligated to honor any request to "opt out" of being surveyed for new credit offers.
To opt out of prescreened offers, call 1-888-567-8688 or visit OptOutPrescreen.com. You can choose to opt out for a period of five years or permanently, or to opt in at any time if you change your mind.
You can also tell your financial institutions to stop sharing your information with third parties. The FDIC advises to look at any information your lenders provide carefully for details on how to opt out. Each lending institution is different, so find out what your bank or credit union's procedures are and contact them.
Opting out reduces your junk mail and potential risk of credit overextension, and it also makes you less vulnerable to identity theft and it even helps the environment and eases the strain on your mail carrier's back.
If nothing else, opting out can help you get some peace of mind from the constant blast of rapacious lenders like Capitol One.
As the administrator of BMW M3 Web site M3Forum.com put it, "Capitol One is the worst. They bombard your credit report and your mailbox with crap. I hate them and will never do business with them even if they gave me 0% [interest] for life plus a $500 kicker."