Is Checking Your Credit and Obtaining Your Free Annual Credit Report Adverse to Your Credit?
A lot of individuals ask themselves whether it is possible to harm their credit score in the process of using the annualcreditreportcom to check the credit report. To many people especially the young ones, there is a belief that this will harm the credit. This is not the case though. Applying once per year for your credit reports as federal law permits will not hurt your credit score.
What Is AnnualCreditReport.com?
Consumers may learn about them from the three main credit reporting companies— Experian, Equifax, and Trans Union—by visiting Annualcreditreportcom. The federal legislation is unambiguous in declaring that every consumer is entitled to have at least once annually a free copy of the report from every agency.
For example, if you ask all three agencies for a credit report and they all provide it to you at once, you will only be permitted to examine the one from the bureau that was delivered once every four months. This permitted verification of your credit score does not affect your credit score in any manner.
This misperception comes from the two primary categories that credit inquiries fall into soft inquiries and hard inquiries.
Most often, it results from a misreading of credit checks: People's belief that obtaining a copy of their credit report would lower their credit scores most likely stems from their inability to differentiate between the two main kinds of credit checks: soft and hard. Simply said, they fall into two main categories: the gentle and the the hard inquiries.
Hard queries made within the same year or month will also probably lower your credit score. These happen each time you ask for credit of any kind—credit cards, vehicle loans, house loans, etc. Every application you complete asks to get your credit score. Higher credit risk is indicated by too high frequency of product placements within a certain run of episodes.
The credit rating of the person is not in any sense changed by soft queries shown on the credit report. Whether you get your free credit report online or purchase it from credit agencies, requesting your credit report following legal requirements also qualifies as a soft inquiry. Soft inquiries also arise from creditors pulling your credit for prescreened offers, from you contesting an account on your credit report and having it pulled once again, or from using a credit monitoring program.
With this in mind, let us look at what influences your credit score:
It is clear from the above analysis that the content of your credit report is what affects your score other than just engaging in a quest for this information. Any payment made beyond the due date, high outstanding balances about credit limits, defaults, legal judgments against you, recorded liens, and bankruptcy adversely affect your credit. Recent hard inquiries also contribute to a low score besides the absence of diverse credit experience.
It is common for people to check their credit standing so that they can identify any problems as soon as they are detected. Using such a method, one can monitor his or her accounts and work on revamping a poor credit status. Credit management and financial responsibility are vital in attaining a good FICO or VantageScore.
This also enables you to correct mistakes on your credit report and also potentially increase your score, should you discover that your credit report contains inaccurate, incomplete, or unverifiable information.
It is recommended to check your credit report at least once per year to ensure that all the information is accurate and free from errors as well as to monitor the activity on your credit report.
- Contrary to other credit report services, annualcreditreport.com is free, and using it does not lessen your scores as a soft audit.
- Credit checks done on yourself also apply to soft inquiries which are usually only visible to you and do not impact your creditworthiness.
- It’s available for free once annually and can be used to check your credit report for errors and signs of fraudulent activity that might signal identity theft.
- This way, since getting your free credit reports, you get to learn the same information that lenders consider when approving financing.
- Under federal law, you also enjoy the privilege of requesting and receiving credit reports from each of the bureaus anytime though it also has no negative impact on your credit.
When to Order Your Free Credit Reports for Monitoring
Thus, as it is important to monitor your credit all year round, credit gurus suggest requesting a new report from one of the bureaus approximately every four months. This enables you to monitor your credit situation more often than if you were waiting for a credit report that could come after months or years.
The best way to get your reports from AnnualCreditReportcom is to select only one bureau at a time when applying for the report. For instance, obtain your Experian report first, then go for the Equifax report in 4 months, and then the TransUnion report in another four months. And by following this cycle, you receive three free opportunities to check your credit in a year and see what else is pulling down your scores.
The Takeaway – If You’re Looking Up Your Credit Score, It Cannot Be Adverse.
While it is recommended that people check reports about their credit history to ensure that there are no errors and to monitor their credit ratings, this checking does not harm the credit scores that lenders use to decide whether to issue a new credit card, a car loan, a mortgage, or another kind of borrowing. Actual application of multiple hard inquiries resulting from them can contribute to the formation of minor dings.
However, what many people do not realize is that it is safe to get your free annual credit reports from AnnualCreditReportcom or to directly purchase the credit reports from the credit bureaus as it does not bring any adverse effect on the scores. These soft inquiries about your accounts are only visible to you and not to your friends, followers, or the public. That way, checking your credit gives you early warning on any issues and an opportunity to fix bad credit situations. It is very crucial to keep checking one’s credit status to ensure that all the best credit scores are maintained.
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