Will checking your own credit report hurt your credit score?
When your credit is checked, this creates what is known as an “inquiry.”
There are two types of inquiries on credit reports:
* A Soft Inquiry
* A Hard Inquiry
When you check your own credit report, this is known as a “soft” inquiry and it will not affect your credit score whatsoever. You can check your credit all you want and your score will not be impacted.
Checking your FICO credit score or pulling your own credit report does not hurt your credit rating. The credit scoring system is set up so that inquiries made by a consumer checking his or her own credit score or credit report do not count in any way whatsoever towards lowering or raising one’s credit score.
When you apply for credit, whether it’s a mortgage or refinance, car loan, credit cards, or any of a number of applications for financing, this creates what is knows as a “hard” inquiry and this will lower your score slightly. Too many different credit applications over a short period of time can lower your credit score significantly, so don’t over-apply for credit.
One other note, if you fill out several credit applications for the same purpose over a short period of time, a mortgage for instance, this will normally be treated as a single inquiry–not multiple inquiries.
Credit inquiries made by credit card companies or mortgage lenders checking your credit report to send you pre-approved offers do not count either. If they did, every American would have a very low credit score.
However, if you respond to those offers, and the credit card company or mortgage lender pulls your credit report to do a more thorough investigation, it does count. It also counts every time you apply for any sort of financing, housing, insurance, employment, etc., and your credit report is pulled. How much does it affect your credit score? Each credit inquiry can lower your score by five points.
Five points for each credit inquiry sounds harsh, and it would be detrimental to someone who applied for many mortgage loans with many different mortgage lenders. However, the FICO scoring system counts multiple inquiries made in a 14-day period as just one inquiry, and all inquiries made within 30 days of the credit score being calculated are ignored. Therefore, if you are shopping for a mortgage loan, you should do all of your applying with various lenders within the same week to protect your credit score.
Does Checking Your Credit Affect Your Score?
By Liz Jones
When you apply for credit, the merchant or financial institution checks your credit report to see if you are a good credit risk. The credit bureaus call these checks inquiries, and they decide if these checks should affect your credit and, if so, how.
Facts
When a company checks your credit for a loan, it has a negative impact on your credit score. However, if you apply for credit only occasionally, the impact is minimal; your score may be lowered only by a few points. Checking your own credit does not have an impact on your credit score.
If you see inquiries on your credit record from companies you don’t recognize, these inquiries don’t have an impact on your credit score. These inquiries are from companies who send out pre-approved credit cards. They check your credit to see if you meet the overall guidelines for obtaining a credit card from their company, which is why you see the inquiry. But because you didn’t request the line of credit, these inquiries don’t count against your credit score. Only the inquiries you generate by applying for loans or lines of credit affect your credit score.
Types
There are two types of credit checks: soft and hard. When you check your credit report to make sure there are no mistakes, that’s called a soft check, and it does not affect your credit score. You should check your credit report often to make sure it accurately reflects your credit history. A hard credit check is when you request a loan or a line of credit from a company.
Significance
Because applying for a loan results in an inquiry on your credit and lowers your credit score, you should apply only for loans you need. If you are buying a new home or car or are applying for student loans, you should shop for the loans within a certain time frame. The credit bureau understands that you need to compare rates to get the best deal on a new home, car or other major purchase, so the multiple inquiries for one purpose are counted as one inquiry.
For example, if the credit bureau sees that five mortgage companies checked your credit over a period of 30 days, the bureau assumes you are applying for a new home loan and will count this as one inquiry. Make sure to do your loan shopping within a 30-day period to avoid lowering your credit score.
Benefits
If you understand that credit card inquiries negatively impact your credit score, you might think twice before applying for that credit card you don’t really need. Without this check in place, some people might take all the credit cards they’re offered and not have he credit they need when it’s time to buy a new car, home or other major purchase.
Warning
Many department stores and other companies entice people to apply for their credit cards by offering free gifts or a percentage off that day’s purchases. Unless you need the department store credit card, avoid applying for credit to get the gift. Frequently applying for credit cards makes the credit bureaus think you are trying to obtain a lot of credit, and this will lower your credit score even if you do not use the credit cards.
