Credit score is an influential factor in your financial life. It affects all aspects of credit, including the eligibility for credit cards and loans, as well as the interest rates. Of course, you want to keep an eye on your credit and ensure that it is not ruined by some fake credit card. But can the act of checking your own credit score actually lead to a decrease in your credit score?
The short answer is no, merely checking one’s own credit score does not reduce it. That’s why monitoring one’s own score also makes sense for a few specific reasons.
Credit report vs score: how to check it
To begin with, let me explain the difference between the credit report and the credit score.
Credit report is your overall summary of your credit history. It displays all your credit accounts, your payment history, inquiries made, and things like bankruptcies or collections. Annualcreditreport. com is the official site where you can obtain your credit reports from the three major credit bureaus within a year for free.
Credit scores are the sums of credit report information, determining your current credit score. Some of the well-known credit scoring models include FICO and VantageScore. When you get scores from myFICO or Credit Karma, you’re going to get both FICO and Vantage scores.
It is important to note that when you are retrieving information about your credit report, it does not impact your credit rating in any way. But if someone else requests your credit report – for example, if you apply for a loan, the lending company pulls your report – it can cause a slight drop in your scores.
Regular Credit Score Check Kept You Aware Of The Problem
Although, doing a check up on your credit score does not cause your credit score to decline, regular-checking of scores assists one in identifying issues that are likely to harm the score significantly. For example, reviewing your credit report regularly can help you:For example, reviewing your credit report regularly can help you:
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Identify mistakes and fraudulent accounts that may be dragging down your scores. It also allows you to challenge any inaccurate information posted by the credit bureaus so that they can be rectified.
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Look for clues like accounts you didn’t open. This way, you can report fraud immediately, and the damage is contained.
- For example, see the change in scores after financing a large purchase. Knowledge of the impact of major credit decisions safeguards your ratings.
Being informed about credit means that one observes declines as well as increases. So, checking your score itself has no ill consequences, however, they do concede that ignoring changes on your credit does put your scores more at risk in the long run.
Importantly, it does not constitute a Hard Inquiry when you check your own credit score.
Here is the main reason checking your credit score does not lower it: But when you check your own score it is considered a soft inquiry only. Soft inquiries are not considered when calculating credit scores and therefore do not harm your credit in any way.
Here are two examples of when consumers check their own credit scores and reports:
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Using credit monitoring sites like Credit Karma and myFICO: They are the sites that offer you the best chance to access your credit reports and scores for free. It is just like opening an account to get the latest credit information you need at the moment. These are always soft inquiries regardless the frequency of using your reports and scores.
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Ordering your free annual credit reports from annualcreditreport. com: According to the federal law, you have the right to request your credit reports from all three agencies once within a year. To the same, checking one’s own reports does not qualify as hard inquiries.
Conversely, when a lender requests your credit report it is referred to as a ‘hard inquiry’. There are two types of inquiries: hard and soft inquiries, and doing many hard inquiries in a short period will lower your scores by a few points.
Hard inquiries include credit checks from:Hard inquiries include credit checks from:
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Applying for a credit card or a loan
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Renting an apartment
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Switching to another cell phone company
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Applying for insurance
Thus, it will never be detrimental to check your own credit because it does not cause new hard inquiries that may reduce your scores. Do not avoid performing regular checkups of your free credit scores and reports. The best approach is to be active in managing your credit so that you can identify problems early and work at achieving good credit scores for the long term.
Monitoring Your Credit Score: Recommendations
It is thus right to maintain the habit of checking your credit score often since it comes with numerous advantages to your credit score while having minimal negative impacts on the scores if properly practiced. Here are a few best practices for monitoring your credit:Here are a few best practices for monitoring your credit:
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Instead of applying for credit, use other services that provide credit scores that perform soft inquiries only such as Credit Karma or myFICO.
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Use your yearly ability to request your full credit reports to see what is contributing to that score.
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Take advantage of free credit monitoring that puts you on notice of big credit changes. This is offered by some banks and credit cards.
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Fluctuations in score is normal so do not be stressed up about minor changes. They mean that scores can fluctuate several points on the regular basis. However, be careful for the large sudden decreases as well.
- Develop a long-term perspective toward a good credit. Generally, checking scores reveals the consequences of one’s daily credit choices.
Thus, it can be stated that there is no punishment for checking own credit scores and credit reports on a regular basis. Indeed, credit tracking is very critical for early identification of problems and an important guide in creating and maintaining a good credit standing. Thus, checking every few months will enable you to get the best scores possible without applying for as much credit.
