Have you been wondering if a simple look at your credit score will do more harm than good? The truth is your credit score isn’t affected when you check it. In fact, understanding more about your credit information is key to improving it. In this article, we’ll explore the ways checking your credit score won’t make it drop, how you can safely and regularly check your score, and the best ways to improve it.
So, let’s explore what you need to know about how checking your credit score can help you improve your credit and finances.
Does my credit score go down when I check it?
No, checking your credit score does not have an impact on the score itself. The credit reporting bureaus have systems in place to differentiate between a consumer checking their own score, and a potential lender or creditor pulls your credit report. Your credit score does not go down when you check it yourself as it results in a soft inquiry.
What happens when you check your own credit score?
Your credit score is not impacted by checking it yourself or getting a copy of your own credit report. Matter of fact, it is important that you regularly check your credit score and credit report to make sure that your account information is current and correct.
When you check your own credit score it results in a soft inquiry. A soft inquiry does not affect your credit score and is not viewable by potential lenders who pull your credit report when you are borrowing money.
A soft inquiry is different than a hard inquiry. A hard inquiry appears on your credit report when a lender pulls your credit report to access your creditworthiness. Hard inquiries affect your credit score, and you can expect your credit score to go down by 5-6 points from a single hard inquiry. Depending on your credit score, a hard inquiry can knock off as many as 10 points from your credit score. In most cases, the effect of a hard inquiry will not be that significant.
Why should you check your own credit score?
Checking your own credit score helps you identify areas that need improvement and get a better understanding of how lenders view you. This will enable you to make more informed decisions about your financial future. For example, if your credit score is not improving due to higher credit utilization on your credit cards, you can put measures in place to lower your utilization rate.
Checking your own credit score also allows you to monitor any fraudulent activity or identity theft on your credit accounts such as credit cards. These activities can easily be detected on your credit report or be shown by a decrease in your credit score due to authorized account activity such as a large purchase, etc.
How to check your credit score for free?
Checking your credit score for free is a relatively easy process. There are many reputable websites that offer free credit scores. Most companies that offer credit cards also give you access to your credit score for free. For example, if you have a credit card from big banks, CapitalOne, Discover, etc., you will also have access to your credit score inside your own account.
All you have to do to get a free credit score is to log into your account and check it yourself. In case you are not sure if your credit card issuer gives access to a free credit score, call them and ask.
If your provider does not offer a free credit score, check your score using other free sources. There are many websites that give you access to your credit score information without paying a penny. To get access to your credit score for free, use the following tips.
- Start by visiting a reputable website that provides free credit score information. Ensure that the website is secure and trustworthy. For example, Creditkarma.com is one of the most reputable websites for free credit score information.
- Create an account on the website. You may need to provide some personal information such as your full name, address, and date of birth.
- Once your account is created, you will be able to view your credit score for free. You may also be able to access other tools and resources such as credit monitoring, identity theft protection, education material, and more.
- Be sure to keep your account secure and regularly update your personal information to keep your credit score accurate. You should also log out of your account every time you access your account especially when you use a public computer.
How many hard inquiries are too many?
When it comes to hard inquiry, it is not about whether a certain number of hard inquiries is good or bad. Knowing that your credit score goes lower every time a hard inquiry appears on your credit report is enough. It is also important to understand that there is no such thing as a good number of hard inquiries.
As a borrower, you should avoid having multiple hard inquiries on your credit report. That is sending in multiple credit applications can result in many hard inquiries since each lender will pull your credit report. This in turn will result in dropping your credit score. The smartest way to manage hard inquiry is to apply for loans or credit accounts that you qualify for.
For example, if you want a credit card, it is a good idea to do your research, check the requirements, and apply for the card you qualify for. This way, it will only take one application to get your card which will result in a single hard inquiry on your credit report. But, applying for 5 credit cards and hoping to be approved for one of them is not a good idea. Why would you want to have that many hard inquiries if you only need one credit card?
What affects your credit score?
Your credit score is a delicate number that goes up and down based on what was reported on your credit reports. In other words, how you use your credit accounts directly affects your score. The following is a list of things that affect your credit score.
- Payment History. Consistently paying your bills on time and in full can help maintain a good credit score. Payment history accounts for 35% of your FICO score.
- Credit Utilization. Keeping your credit utilization ratio at a low level by only using a small percentage of your available credit can help maintain a good credit score. Credit utilization accounts for 30% of your FICO score.
- Types of Credit (Credit Mix). Using a mix of credit types such as auto loans, credit cards, and mortgages can have a positive impact on your credit score. Credit mix affects 10% of your FICO score calculation.
- Length of Credit History (Credit Age). Establishing and maintaining a long credit history will provide a positive impact on your credit score. The age of your credit affects your credit score by 15%.
- Credit Inquiries. Limited credit inquiries can help maintain a high credit score since too many inquiries can indicate high risk. Hard inquiries account for 10% of your FICO score.
The bottom line
It is important to know that regularly checking your credit score doesn’t lower it. In fact, it’s beneficial to stay informed about your credit score and regularly check it. Checking your credit score is a sound financial practice, as it helps you to monitor and improve it and repair your credit. Remember, you are the one in control of your credit score and your finances. So, be sure to manage and monitor how you are doing in terms of improving your score and detecting unauthorized usage.
For example, if you see a big drop in your score and are unaware of its causes, you can investigate immediately. Usually, the score will show what is hurting it such as late payment, utilization, etc. In case, it is a fraudulent activity, you will take action ahead of time.
