Several individuals have asked whether one can check his or her credit score without having a detrimental effect on the score. Since credit plays a major role in finances such as approval for loans or credit cards, it is only natural to be worried about anything that can negatively affect it.
The good news, however, is that merely running a credit check on oneself does not have any negative impact on the credit score in any way. However, if you are the one checking your own credit score using the services of AnnualCreditReport. com or sites of any credit card company and bank, it is going to be a soft inquiry. Soft inquiries in particular have no bearing on your score in any given way.
What Does Cause Your Credit Score to Go Down
There are actually situations that result in the reduction of credit score. The most common reasons for credit score drops include:The most common reasons for credit score drops include:
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Late Payments – If you fail to pay your bills on time, become a fugitive on your duties, or simply default on your debts, your score will dip down. This puts lenders in a higher risk zone.
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High credit utilization ratio – Utilizing more than 30% of your total available credit limits will gradually begin to bring down your score. It is very important to know that bringing your credit cards to their limit is indeed bad for your rating.
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Too Many Hard Inquiries – Each time you apply for credit, the credit provider pulls your credit report. When taken in large amounts within a short period, potential problems arise.
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Many New Accounts - Applying for new credit cards or loans lead to increase risk even if they are approved they will reduce your score.
- Debt settlement for lesser amount than owed – Even though debt settlement appears to be advantageous, it is disadvantageous to the credit score.
- Just to reiterate, as long as you do not engage in the aforementioned credit damaging behaviors, having your credit score checked will actually not bring it down in the least. Checking your score regularly assists in identifying such problems and enhances financial behaviors in the process.
Why You Should Monitor Credit Often
There are many benefits to keeping tabs on your credit score a few times per year or at least annually:There are many benefits to keeping tabs on your credit score a few times per year or at least annually:
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Monitor for Any Errors: Contrary to expectations, mistakes in financial reporting are not very rare. Checking enables you to object to things on your report before they become much worse.
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Track Improvement: Checking, when attempting to raise your score by improving your financial behaviour, means being able to see the results. This keeps motivation up.
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Catch Identity Theft Early: Often, the first indication of identity theft is the decline in your credit rating. It sends an alert as soon as there is an issue.
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See Impact From Life Events: This means credit is affected by certain activities such as taking a large loan, paying off a balance or merging accounts with a partner. Scanning shows whether that impact is positive or negative.
- Better Rates on Financial Products: The better your credit rating the better the rates you will be able to get once you apply for credit cards, car loans, mortgages among others. This way, you can schedule your applications for when your score is higher, instead of it being lower when you are checked.
How Frequently One Should Monitor Their Credit Score
About this, there are no strict guidelines because even if one looks at the score twice a year, this is much better than never glancing at it at all. But generally, here are some good guidelines:But generally, here are some good guidelines:
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Twice per year: It is advisable to check your credit score at least twice a year, maybe middle of the year and before filing for tax returns. Always scrutinize all the accounts and entries every time you check to ensure that everything appears correct. The idea to do a review on this basis is that one gets a sense of satisfaction that is pretty much all right at least twice a year.
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Quarterly: For instance, maintaining your credit score and checking it at least once in every fiscal quarter of the year is important if you wish to track fluctuations in your score. This gives you four good figures showing the trend of your score is likely to take. Write down what caused previous oscillations up or down.
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Monthly: Individuals who will seek to be very keen on ensuring that they record their score often should ensure that they monitor their credit rating on a monthly basis. This might be advised if one is pursuing efforts to rectify bad credit or passed through a negative score period. When preparing to make major financial applications in the near future, monthly monitoring also assists in making sure that your score is again as high as it can be when it is needed.
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Significant Life Events: At minimum, be sure to check your score after whenever you go through something that commonly affects credit – taking out or paying off loans, applying for new credit, tying the knot, helping kids fill out the FAFSA, or moving to a new place. It is often unclear how an event might change your rating.
Once again, simply receiving information about credit score does not affect it in any way. It is financially beneficial to be routinely knowledgeable of the rating history, present state and the level of rating accuracy. Remember, it is wise to check your own score at least twice a year or more often if you are struggling to improve it. In building great credits monitoring is power.
