Matthew Oliver
True or false: Does checking your credit score lower it?
One of life's scariest and most challenging financial questions is, does checking your credit score lower it? Anytime your credit score is checked, an inquiry is sent to your credit report. The inquiry will then be classified as either a soft inquiry or a hard inquiry. This all depends on who is checking your score and why.
Checking your own credit score would be considered a soft inquiry and while there are other types of soft credit inquiries, there are also several types of hard inquiries that could affect your credit score. Here are some tips to help you with how to check your credit score without it negatively affecting your credit report.
Soft and hard inquiries
A soft inquiry, also referred to as a soft credit check, happens when you check your own credit score, when a landlord or employer gets your permission to run a credit check, or when a lender runs a credit check to pre-approve you for an offer. A soft credit inquiry does not affect your credit score because you aren't applying for any credit. Hard credit inquiries however can affect your score
Hard credit inquiry
A hard inquiry appears when on credit reports when a lender checks your credit if you are applying for a credit card, new loan, or line of credit. These can affect your score for a short period if you are up to date with all your payments and can prove that you can manage new debt.
If you don't, a hard inquiry can last on your credit history for up to two years, but most of the scores only go down a few points. Multiple hard inquiries can have your score go down significantly and make it much harder to get a new loan or credit card.
How often should you check your credit score?
Here's the good news, you can check your own credit scores without hurting your credit history and you should actually be checking it monthly. Soft inquiries don't affect the score because you aren't applying for a credit card or auto loan, you are just looking at your score to make sure you are in good standing. So if you do eventually need a car loan or student loan, checking your score every now and then can help you in the future when you actually need to get a line of credit.
Landlord or employer credit checks also do not affect your score since they aren't giving you credit, and are just checking your credit scores to see if you are in good financial protection. At the very least it's a good idea to check your credit score once a year to make sure you have good overall credit health.
Here's the good news, you can check your own credit scores without hurting your credit history and you should actually be checking it monthly.
Where to check
Finding a free credit score used to be very difficult, but thankfully now things have gotten much easier. The website AnnualCreditReport.com offers you a free credit report yearly and makes life much easier and many other financial institutions can offer you free fico scores as an added benefit or perk for signing up to that specific financial institution. A fico score is a calculation of your credit scores with software from the Fair Isaac Corporation.
Your fico score is typically where a mortgage lender or auto lender will check your credit report, so going with a fico credit score will be your best option. Other credit scoring models might get you in the ballpark of what your score is, so use fico score if you can. A credit score and a credit report are slightly different things and the big difference between them is the three major credit bureaus that produce credit reports. The three credit bureaus that offer credit reports are Experian, Equifax, and TransUnion.
If you use a credit bureau, you will most likely pay for your score. It's not much money, but typically you need to spend money to see your credit reports. And again, checking your own credit reports will not affect your credit score if it's a soft pull. You do not need credit monitoring or identity theft protection to view your scores. A fico score will be your best bet when making financial decisions.
Improve credit scores
So let's say you want/need a new credit card and credit card issuers are saying your credit score is too low. You do soft credit checks all the time and cannot believe that you allowed your score to go so low. What should you do?
Pay your payments
Making sure all of your monthly payments are paid in full on time is one of the best ways to keep your score high. Payment history is what most auto lenders check to see if you are eligible for a car loan and the same goes for a credit card issuer. So if you are behind on your personal loans, check your bank accounts and get those payments made.
Making sure all of your monthly payments are paid in full on time is one of the best ways to keep your score high.
Don't seek new credit
Obviously, if you need a new loan to pay off your finances, but if you do not need new credit, do not get it. This will only hurt your chances if you are trying to get your score higher and having multiple credit accounts will make your fico credit report look bad to credit card issuers.
Credit score confidence
There are many things to do when checking your credit score. The most important thing is that soft inquiries do not make your scores go lower. Checking your score regularly is one of the best ways to keep a high credit score. Your fico score is the best and most accurate score you can send to lenders to get that loan or expense approved.
So to answer people's dying questions, no, checking your score will not lower, but someone else checking, like a lender, will. This will affect your score for a bit, but making sure you keep up on your payments and not accruing new and unnecessary credit will have your debt shrink and your scores go higher. So if your new credit score knowledge, go out into the world with confidence that you know more about credit scores than most people. You may even impress a lender or two! And if you need to refinance your auto loan, RateWorks can help with that. Get a free quote today!
