Does Checking Your Credit Score Lower It?
A good credit score can give you access to more credit opportunities, lower interest rates from lenders, better terms on your car insurance and so much more. It’s a good number to know when it comes to personal finance, yet almost a quarter of all American consumers have never checked their credit score — and four in 10 Americans don’t know how their score is calculated.
Checking your score can help you know where you stand, understanding what goes into calculating your score lets you see where you could improve.
Does checking my credit score lower it?
No, checking your own credit score will not lower it. This is because when you look at your own credit score, you’re performing a “soft inquiry,” also known as a “soft pull.” Soft inquiries are typically used as an overview of your basic credit history and information. Compared to “hard” pulls, they won’t impact your FICO score. Hard pulls are used by many traditional lenders when you apply for credit, and they may lower your score.
Checking your credit report also won’t impact your score. You can request your credit report for free from any of the major credit bureaus every 12 months. Your credit report will provide the details of credit history so you can see what is affecting your score. It’s important to review your credit report for any errors and to stay on top of your financial health.
What if someone else checks my credit?
Whether or not someone else checking your credit affects your score depends on what type of credit check they perform. A soft pull won’t affect your credit, but a hard inquiry will.
Hard credit inquiries. A hard inquiry (or “hard pull’) will affect your credit score. This is because a hard credit pull is generally used when you’re applying for new credit. When you apply for a credit card, car loan, mortgage, student loan or a personal loan, the lender or credit card issuer may perform a hard pull to see your credit file and determine approval. Hard pulls are more likely to be damaging if your account shows too many of them over a short period of time.
Not all lenders need to do a hard credit pull to approve you for credit. Some may perform a soft pull or they may look at other financial data.
Soft credit inquiries. A soft credit check can occur even when you’re not applying for credit, which is why it won’t impact your score. Landlords, insurance companies and other institutions can perform soft credit pulls to get a basic overview of your creditworthiness. Lenders may also use it to preapprove borrowers.
It’s important to monitor your credit score, it impacts more than you may think and it’s not just financial institutions that may be checking.
How do I check my credit score?
When looking at your credit score, you’re likely seeing your FICO score or VantageScore. This number is based on information in your credit reports from the three major credit bureaus.
Checking your credit score is pretty simple and there are a number of different ways to check it for free.
Banks. Banks often offer their customers free credit scores and credit monitoring services. Check with yours to see if it’s included with your bank account. You can check online or reach out to a customer representative for help.
Financial wellness companies. Companies like Credit Karma and Credit Sesame offer free credit checks. They focus on helping customers monitor and improve their credit scores. You may need to sign up, but they often offer other services that can help you with everything from finding the best credit card offers to monitoring for identity theft and fraud.
Budgeting apps. In addition to helping you keep track of your budget and manage your personal finances, many budgeting and personal finance apps will also help you monitor your credit score for free.
What’s the difference between my credit score and credit report?
Your credit score is different from your credit report. Your score is just a number between 300 and 850 that represents your creditworthiness. Your credit report, on the other hand, will list the details that were used to calculate that score.
There are three major credit bureaus.
- Experian
- Equifax
- TransUnion
You can also request a free credit report once a year from each of the credit reporting agencies through www.AnnualCreditReport.com.
How often should I check my credit?
Credit score. Ideally, you should be checking your score at least every few months — and it doesn’t hurt to check it more than that. Monitoring your score can help you prevent identity theft and fraud. You should also check your score if you’re planning on applying for credit or have any big events coming up.
Credit report. You should check your credit report once a year. (Take advantage of the yearly free copy of your credit report.) This can help you catch errors and identify where you could improve your credit habits.
What goes into a credit score?
Your FICO score is calculated from the information collected by the credit reporting agencies. Here’s how it breaks down.
Payment history. Your repayment history counts for 35% of your credit score. Missed or late payments can damage your credit, but paying on time will help you maintain healthy credit.
Credit utilization ratio. How much you owe versus how much available credit you have makes up 30% of your credit score. Experts recommend keeping this percentage below 30%. So if you have a credit card with a $10,000 limit, you should keep your balance below $3,000.
Age of credit accounts. How long you’ve been using credit makes up about 15% of your score. If you’ve been using credit for a while, you may see a boost in your score. This is because it shows lenders that you have experience using credit.
Credit mix. What kind of credit you use influences 10% of your score. Having a healthy mix of different types of credits can show lenders that you’re able to manage your finances well.
New credit. New credit also contributes to 10% of your credit score. When you apply for a lot of new credit in a short period of time, it can be a red flag to lenders. Whenever you submit a credit application, your score can be dinged by a few points but it will typically recover quickly.
What are the benefits of checking my credit score?
A good credit score can open doors. You can get access to different credit with better terms like higher credit limits and lower interest rates. You’ll be more easily able to secure auto loans, mortgages, personal loans and new credit cards. You could see lower rates on your car insurance, landlords will be more willing to rent to you — the list goes on.
Regularly checking your credit score can help you take control of your financial and credit health. It will help you understand where you stand, and help you see where you want to go — and what you need to do to get there.
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