Does checking credit score lower it?

Posted on: 01 Aug 2024

An increasing number of individuals raise the question of whether they can harm themselves by merely checking their credit score. This concern often deters people from checking up on their scores as frequently as they should. The good news is that simply pulling your credit scores will not impact it at all. There are other ways through which one can hurt his credit score but the least one can do is to conduct his credit score inquiry.

What is a Credit Score

It is important to first understand what a credit score is before delving into whether checking one lowers it. A credit score is a three-digit number that ranges between 300 and 850 and gives an overview of the state of your credit. Your credit score is among the details that lenders rely on to decide if you qualify for a loan and if so, what interest rates you should be charged.

The scores are derived from the data found in your credit reports maintained by three credit reporting agencies namely Equifax, Experian, and TransUnion. These include details concerning your payment history, credit utilization, types of credit accounts, and other elements. Employing covert equations, the bureaus transform this information into those three-digit numbers painting your creditworthiness picture. Therefore, a high score reassures lenders that you are capable of handling credit responsibilities.

Why Should One Check His or Her Credit Score

It is beneficial to know your credit score so you are aware of how potential lenders look at your creditworthiness before applying for credit. This means that, in case of any mistake on your credit report, you have ample time to rectify the situation and avoid further damage. Besides, tracking your score is useful in determining the achievement of your credit targets and, more so, identifying identity theft if your score drops drastically.

There are a few free ways to check satellite signals without causing any form of damage

Fortunately, in the present day, there are many ways of tracking your latest score and none of these ways has the potential to create a dent in your pocket. Here are some easy ways to check:

AnnualCreditReport. com – According to federal law, individuals are eligible to receive their credit reports from Equifax, Experian, and TransUnion once a year at least. Although these reports do not include your scores, it is helpful to look at them for signs of fraudulent behavior.

Free Credit Score – credit card companies are adding to the list of companies that offer free credit scores to users. Go to your account and look at the available slots.

Free Score Sites – Many websites like Credit Karma offer free credit scores and reports in return for considering credit products. Although some ads may be irritating, the use is safe and does not pose any risks.

As you can observe, you don’t have to worry about decreasing your scores anytime you use these no-charge ways of checking them. Do not allow the above fears to be a hindrance to monitoring your number.

Hard Inquiries Lower Scores

But if checking a credit score does not reduce the score further, then what does? While hard inquiries – those arising from applications for new credit lines – pinch your score for a short while. Every time you apply for a new credit card or loan, the respective company pulls your credit report to review your application — this is a hard inquiry and will lower your score by a few points.

However, some good news: the effect usually ranges from negligible to 10 and is unlikely to be felt after one year or so. Second, FICO categorizes credit inquiries differently from any other considerations in the credit scoring process. It excludes questions made within the 30 days before calculation since most of them are made for this reason as per the rand shopping hypothesis and not because of the financial woes. FICO also utilizes the approach of excluding all the inquiries made in the past year to an extent. Therefore, a couple of queries while price comparison will not harm good scores.

You need to know that monitoring will not harm your credit score in any way nor will it lower your score

That being said, consumers often compare shops for their mortgage rates while exploring a new home or interest rate for refinancing an existing mortgage. This creates many hard inquiries in a short period. However, FICO’s comprehension scoring models shall not penalize monitor buyers for being careful. Basically, within a 14-45 day window, multiple loan inquiries are treated as one inquiry and do not ding for each one. This eliminates what may be regarded as punishment for being an informed consumer.

The only way in which monitoring your score could harm it is if you sign up for a credit monitoring service that pulls your credit report to add you to their free list. Certain services may offer annual reviews in which they may request more hard inquiries in return for granting you free continuous access to your credit information and notification. The inquiries to join probably reduce scores less, when done than doing it frequently, each month and it is possible.

Always make sure to read the prerequisites and the fine print when signing up with any credit checking service and ask yourself whether it is viable to take a small hit to your score just to get ongoing monitoring in the future. In some cases, if you ask for permission and are polite, this hard inquiry may not be conducted at all. If the first hit and any annual reviews do not bother you, free monitoring services offer score access without constant harm.

So in conclusion – no, frequent credit score checking does not harm your credit score even if done many times. Where many consumers fail is in assuming that inquiries – whether hard or soft – are the same as obtaining a credit score through various avenues for free. Even if you run annual free reports, have credit cards, or monitor a site that doesn’t involve hard inquiries – it is not a sin to be an informed consumer controlling changes in the score.