Is it safe to check your own credit score?

Your credit score is a crucial component of your financial health. It influences your ability to secure loans, mortgages, credit cards, and even impacts things like insurance rates and rental applications. Understanding your credit score is vital for making informed financial decisions. A common question, however, is: "Is it safe to check my own credit score?" The short answer is yes, checking your own credit score is generally safe and won't hurt your credit rating. But there are nuances to understand, particularly regarding the difference between soft and hard credit inquiries.

Understanding Credit Scores and Credit Reports

Before diving into the safety of checking your score, let's clarify the difference between a credit score and a credit report.

• Credit Report: A detailed history of your credit activity. It includes information such as your payment history, outstanding debts, credit card accounts, and any public records like bankruptcies. Credit reports are compiled by three major credit bureaus: Equifax, Experian, and TransUnion.
• Credit Score: A three-digit number that summarizes your creditworthiness based on the information in your credit report. It's a snapshot of your credit health at a particular point in time. The most commonly used credit scoring models are FICO and VantageScore.

Why Knowing Your Credit Score Matters

Knowing your credit score empowers you to:

• Secure better interest rates: A higher credit score translates to lower interest rates on loans and credit cards, saving you significant money over time.
• Get approved for loans and credit cards: Lenders use your credit score to assess your risk, so a good score increases your chances of approval.
• Negotiate better terms: You can leverage a good credit score to negotiate better terms with creditors.
• Identify errors: Regularly checking your credit report allows you to identify and correct any inaccuracies that could be negatively impacting your score.
• Monitor for fraud: Checking your credit report can help you detect fraudulent activity, such as unauthorized accounts opened in your name.

Soft Inquiries vs. Hard Inquiries: The Key to Safety

The core of the "Is it safe?" question lies in understanding the difference between soft and hard credit inquiries.

• Soft Inquiry (or "Soft Pull"): Occurs when you check your own credit score, or when a company checks your credit for pre-approved offers or background checks. Soft inquiries are not visible to lenders and do not affect your credit score. Think of it as a peek behind the curtain – it's information gathering, not an assessment of your creditworthiness for a specific loan or credit application.
• Hard Inquiry (or "Hard Pull"): Occurs when you apply for credit, such as a loan, credit card, or mortgage. Lenders use hard inquiries to assess your creditworthiness and determine whether to approve your application. Hard inquiries are visible to lenders and can slightly lower your credit score, especially if you have multiple hard inquiries in a short period.

Checking your own credit score almost always results in a soft inquiry. Therefore, checking your own credit score will not hurt your credit score. The confusion often arises because people assume that any activity related to their credit report automatically impacts their score. This is not the case.

Examples of Soft and Hard Inquiries

To further illustrate the difference:

Soft Inquiries:

• Checking your credit score on Credit Karma, Experian.com, or similar platforms.
• Your bank checking your credit score to offer you a better credit card.
• Employers performing a background check (with your permission).
• Insurance companies checking your credit for policy quotes.

Hard Inquiries:

• Applying for a new credit card.
• Applying for a mortgage.
• Applying for a car loan.
• Applying for a personal loan.

How to Check Your Credit Score Safely and for Free

There are several legitimate and safe ways to check your credit score without negatively impacting it:

1. AnnualCreditReport.com: The official website to access your free credit reports from Equifax, Experian, and TransUnion. You're entitled to one free credit report from each bureau per year. While this site primarily focuses on reports, some providers offer a credit score for an additional fee or trial period. Focus on obtaining the report itself to review for accuracy.
2. Credit Karma and Credit Sesame: These platforms offer free credit scores and credit reports based on the VantageScore model. They provide credit monitoring services and personalized recommendations to improve your credit health. Be aware that these are often VantageScores and not FICO scores. While VantageScore is a valid scoring model, FICO is used more frequently by lenders.
3. Credit Card Statements: Many credit card companies now provide free credit scores as a perk to their cardholders. Check your monthly statements or online account to see if this service is available. These scores are generally derived from either FICO or VantageScore, so knowing which model is used is helpful.
4. Experian, Equifax, and TransUnion Websites: Each of the major credit bureaus offers options to check your credit score directly. Often, this involves signing up for a paid subscription, but they may offer a free trial period. Ensure you understand the terms and conditions before signing up to avoid unwanted charges.
5. Nonprofit Credit Counseling Agencies: Reputable nonprofit credit counseling agencies can provide you with a free credit report review and credit score assessment. They can also offer guidance on managing your debt and improving your credit.

Tips for Safe Credit Monitoring

Beyond simply checking your score, proactive credit monitoring is essential for maintaining good credit health:

• Review your credit reports regularly: Even if your score is good, scrutinize your credit reports for errors, inaccuracies, or signs of fraud. Dispute any incorrect information with the credit bureaus promptly.
• Set up fraud alerts: Consider placing a fraud alert on your credit file if you suspect you've been a victim of identity theft. This requires lenders to take extra steps to verify your identity before approving credit applications.
• Consider a credit freeze: A credit freeze restricts access to your credit report, making it difficult for identity thieves to open new accounts in your name. You can temporarily lift the freeze when you need to apply for credit.
• Be wary of phishing scams: Never provide personal or financial information in response to unsolicited emails or phone calls. Legitimate credit reporting agencies will not ask for sensitive information in this manner.
• Use strong passwords: Protect your online accounts with strong, unique passwords and enable two-factor authentication whenever possible.

Debunking Credit Score Myths

Several myths surround credit scores and credit reports. Here are a few to be aware of:

• Myth: Checking my credit score will lower it. This is false. As discussed, checking your own score results in a soft inquiry, which doesn't affect your credit score.
• Myth: Closing credit card accounts will improve my credit score. Closing accounts can actually hurt your score, particularly if you close older accounts or accounts with high credit limits. Keeping accounts open (even if you don't use them) can increase your available credit and improve your credit utilization ratio, a significant factor in your credit score.
• Myth: All credit scores are the same. Credit scores vary depending on the credit scoring model (FICO vs. VantageScore) and the data used by the credit bureaus. Don't be surprised if you see slightly different scores across different platforms.
• Myth: Paying off debt immediately improves my credit score. While paying off debt is generally beneficial, the immediate impact on your credit score may not be significant. It takes time for the credit bureaus to update your payment history.
• Myth: I don't need to check my credit report if I have good credit. Even if you have a good credit score, it's still essential to check your credit report regularly for errors or signs of fraud. Catching and correcting these issues promptly can prevent potential damage to your credit.