Does Checking My Credit Score Lower My Credit?

One of the most common questions about credit scores is whether or not checking your own score can negatively impact it. The answer, fortunately, is nuanced and largely reassuring. In short, checking your own credit score yourself will not lower your credit score.

Understanding Credit Inquiries: The Key to the Answer

To fully grasp why checking your credit score doesn't hurt your credit, it's essential to understand the two main types of credit inquiries: hard inquiries and soft inquiries.

Hard Inquiries: The Ones That Can (Potentially) Matter

A hard inquiry, also known as a "hard pull," occurs when a lender or financial institution checks your credit report to make a lending decision. This typically happens when you apply for:

• A new credit card
• A loan (mortgage, auto loan, personal loan)
• A lease (apartment, car)

These types of inquiries signal to credit bureaus that you're actively seeking new credit, which can slightly lower your credit score, especially if you apply for multiple forms of credit within a short period. The impact is usually minimal, and most hard inquiries affect your score for no more than a year. However, applying for multiple credit cards at the same time, for example, could signal higher risk to lenders.

Why Do Hard Inquiries Affect Your Credit Score?

Credit scoring models, such as FICO and VantageScore, are designed to assess risk. Applying for new credit suggests a potential increase in your debt load, which can increase the risk of default. Multiple hard inquiries in a short period can suggest financial instability or desperation for credit.

It's important to note that the impact of a hard inquiry is usually small, and it diminishes over time. FICO, for example, states that most inquiries have very little impact, and some have no impact at all. VantageScore also considers the context of the inquiry. Shopping for an auto loan or mortgage, for instance, allows you to compare rates, and credit bureaus understand this. Multiple inquiries for the same type of loan within a specific timeframe (typically 14-45 days, depending on the model) are often treated as a single inquiry.

Soft Inquiries: The Ones That Don't Affect Your Credit Score

A soft inquiry, also known as a "soft pull," occurs when you or a company checks your credit report for informational purposes. These inquiries do not affect your credit score. Soft inquiries typically include:

• Checking your own credit report
• A credit card company pre-approving you for a credit card
• A potential employer checking your credit (with your permission)
• Insurance companies checking your credit for policy quotes (in some states)

Why Don't Soft Inquiries Affect Your Credit Score?

Soft inquiries are not viewed as indicators of applying for new credit. They're considered informational checks and don't suggest an increased risk of default. Credit scoring models recognize that consumers have a right to access and understand their credit information, and they don't penalize them for doing so.

Think of it this way: hard inquiries are like applying for a job, while soft inquiries are like browsing job postings. One shows intent to borrow, while the other is simply gathering information.

Checking Your Own Credit: A Soft Inquiry

When you check your own credit report through services like AnnualCreditReport.com (the official site to get your free annual credit reports), Credit Karma, Experian, Equifax, or TransUnion, these checks are considered soft inquiries. Therefore, checking your credit report as often as you like will not hurt your credit score.

Why You Should Regularly Check Your Credit Report

Checking your credit report regularly is crucial for several reasons:

1. Detecting Errors: Credit reports can contain inaccuracies, such as incorrect account information, outdated addresses, or even accounts that don't belong to you. Identifying and correcting these errors can improve your credit score.
2. Identifying Fraud: Monitoring your credit report can help you detect potential identity theft or fraudulent activity. If you see accounts or inquiries that you don't recognize, it could be a sign that someone has stolen your identity and is using your credit.
3. Tracking Your Progress: Regularly checking your credit report allows you to track your progress in building or rebuilding your credit. You can see how your credit score changes over time and identify areas where you can improve.
4. Understanding Your Creditworthiness: Knowing your credit score and the factors that influence it can help you make informed financial decisions. You'll have a better understanding of what types of loans or credit cards you're likely to be approved for and what interest rates you'll qualify for.

How to Access Your Free Credit Reports

You're entitled to one free credit report from each of the three major credit bureaus (Experian, Equifax, and TransUnion) every 12 months. You can request these reports at AnnualCreditReport.com. This is the only website authorized to provide free credit reports under federal law.

Additionally, many credit card companies and financial institutions offer free credit score monitoring as a perk to their customers. Take advantage of these services to stay on top of your credit health.

Beyond Checking: Other Factors Affecting Your Credit Score

While checking your own credit won't hurt your score, other factors have a significant impact. Understanding these factors is key to maintaining a healthy credit profile.

Payment History: The Most Important Factor

Your payment history is the single most important factor in determining your credit score. Making on-time payments on all your debts (credit cards, loans, utilities, etc.) is crucial for building and maintaining good credit. Late payments, even by a few days, can negatively impact your score. Delinquencies, defaults, and bankruptcies can severely damage your credit and remain on your report for several years.

Amounts Owed: Your Credit Utilization Ratio

The amount of debt you owe relative to your available credit is another significant factor. This is often referred to as your credit utilization ratio. Experts recommend keeping your credit utilization below 30% on each credit card and overall. For example, if you have a credit card with a $1,000 limit, try to keep your balance below $300.

Length of Credit History: Time is on Your Side

The length of your credit history also plays a role in your credit score. A longer credit history generally indicates to lenders that you have experience managing credit responsibly. However, even if you're new to credit, you can still build a good credit score by making on-time payments and keeping your credit utilization low.

Credit Mix: Diversity Matters

Having a mix of different types of credit (e.g., credit cards, installment loans, mortgages) can positively impact your credit score. However, it's not necessary to take out loans you don't need just to diversify your credit mix. Focus on responsibly managing the credit you already have.

New Credit: Approach with Caution

As mentioned earlier, applying for new credit can trigger hard inquiries, which can temporarily lower your credit score. Avoid applying for multiple credit cards or loans within a short period, especially if you're already carrying a high debt load.

Conclusion: Check Your Credit with Confidence

Checking your own credit score and report is a vital part of managing your financial health and will not hurt your credit. It's a soft inquiry and provides valuable insights into your creditworthiness, allowing you to detect errors, identify fraud, and track your progress. Don't hesitate to check your credit regularly. The more informed you are about your credit, the better equipped you'll be to make sound financial decisions and achieve your financial goals.