The credit report and credit score are critical aspects of your financial life. When you apply for loans or credit cards, your credit report and score are used by lenders to assess your creditworthiness. Another one is the landlords also request copies of the credit records of their clients as well. Since credit plays such a vital role in people’s lives, it is wise to check it frequently to check for any discrepancies and instances of fraud. Nonetheless, a frequent query is whether checking the credit report affects your credit score.
This means that when you check your credit report it has no negative impact on your credit score. The two primary credit bureaus that allow consumers to obtain copies of their credit reports are Equifax and TransUnion. This will mean that requesting your report from them does not in any way affect your score. However, if another entity runs your credit, like when you apply for credit, that will lower your score marginally.
Soft Inquiries are Inquiries that do not have any impact on your FICO Credit Score
The term “inquiry” means when a person checks your credit report. A soft inquiry is when you or a potential employer performs a credit check on yourself. Soft inquiries have no effect on your score in any way. A hard inquiry on the other hand is usually made when you complete a credit card or loan application. It is also important not to have too many hard inquires within a short period of time as this is also not good for your credit score.
SomeConfusion Around AnnualCredit Reports
The law compels Equifax, TransUnion and Experian to make one report on credit available to consumers for them to check their financial status annually. These are got from AnnualCreditReportcom and not directly from the bureaus as we have seen in the previous steps. It is important to know that when you request your annual reports, you aren’t affecting your scores at all.
Still, some confusion may arise from the fact that there is a site called AnnualCreditReport. com and FreeCreditReport. com. The site is actually an operation that enrolls users in credit monitoring from Experian for which they are charged on a monthly basis, according to the Federal Trade Commission. Do not use this site for your free yearly credit reports.
Maintain the Credit Report for Frequent Checking
Since credit check does not in any way bring lower scores to your credit, you can as well check your credit frequency without any restrictions. Indeed, according to the financial advisors, it is advisable to check at least once a year, if not more. Here are some reasons why it pays to check frequently:Here are some reasons why it pays to check frequently:
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Understand where you stand – Minor mistakes on your credit report can significantly decrease your score. Some reports may include wrong account information, payment that you never made, or even accounts that are not yours. Challenging errors early can minimize score harm.
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Fraud accounts - If someone has taken your identity and opened accounts using it, this will reflect on your report. Detecting suspicious activity early prevents additional losses and informs creditors of fraud.
- Track progress – Depending on efforts being taken to bring change to the credit report like paying balances, rectifying errors, one can keep checking for the progress.
How to Get Your Credit Reports
According to federal law, you are allowed to request a credit report from each bureau once a year at AnnualCreditReport. com. Where possible, try to spread the requests you make throughout the year. It is also possible to buy credit reports from the bureaus themselves. Here are some options:
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Equifax – Free report once a year; $19. 95 for additional reports
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Transunion – free report once a year, $14. 95 for additional reports
- Experian – Free report annually only
Last of all, numerous Internet sites offering information on personal financial management, such as Credit Karma, offer free credit scores and reports at any time of the year. However, these credit scores are frequently derived from a scoring system that is different from that employed by lenders. You should check your reports from AnnualCreditReport. com to see the data as potential creditors may see it.
It is a wise move to occasionally monitor your report, although, refrain from making ‘hard’ inquiries where possible. For instance, do not apply for several credit cards within a short period of time. Shopping around for a mortgage or auto loan over a period of say a couple of weeks will not severely impact your scores in a negative manner. But do not apply for new accounts just to see if you would be approved as this would trigger credit checking. It is advisable that every lender’s credit check can reduce your score by a few points.
Be a wise consumer of credit
Regularly check your credit report to notice any discrepancies or unauthorized actions at the earliest. But, do not limit the credit check by lenders and other financial institutions to reduce the score drop. However, you can look at your credit as often as you like as long as you are ordering your own reports. Such check assists you in regaining control over your credit status because you get to do it frequently.
