It’s long been said that if you check your credit score, it may experience a drop. But in reality, if you yourself are checking your score through a free website or app, you can check as many times as you like without any damage to your score. However, if a lender checks your credit score, there’s a good chance your score may drop, at least temporarily. These changes are usually reverted once the hard inquiry goes through.
Don’t forget about your long-term financial goals while you work on your credit. Speak with a local financial advisor today.
Types of Credit Checks
When it comes to credit checks, there are two different kinds: hard inquiries and soft inquiries. A soft inquiry is a credit check that you perform yourself to view your credit report, and they don’t hurt your credit score at all.
For example, a soft inquiry will be initiated when you use a website like Credit Karma or another free tool. On these sites, you can view a summary of your entire credit profile, including total accounts, credit utilization, hard inquires and more. Lenders may also perform soft inquiries to pre-approve you for a loan.
Then there are hard credit inquiries. These inquiries occur when a lender pulls your credit report from a credit bureau in order to make a decision about whether to extend credit to you. For example, when you apply for a new credit card, the credit card company will perform a hard inquiry.
What Credit Checks Can Hurt Your Credit Score?
Hard inquiries, sometimes referred to as “hard pulls,” will have a negative effect on your credit score. While the effect is usually minimal, it’s important to know that it can happen. According to credit scoring agency FICO, hard inquiries typically make a credit score drop about five points. Hard inquiries remain on your credit report for just two years.
Again, there’s no need to worry about a soft credit inquiry affecting your credit score. In other words, you won’t be punished simply for keeping an eye on your credit profile.
At the end of the day, you can personally check your credit as many times as you please without it hurting your score. There are a few ways of checking, whether through a third-party website or an existing credit card or loan account.
The only way that a credit check can hurt your score is if it’s done by a lender when you apply for a new line of credit. But even in this situation, your score shouldn’t be negatively affected too much.
Tips for Maintaining Your Credit Health
- Worrying about your credit can take your attention away from saving for retirement and investing. A financial advisor can help with this. If you don’t have a financial advisor yet, finding one doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- There are a number of ways to improve your credit score. Responsibly managing your credit cards, making payments on time and keeping your debt-to-income (DTI) ratio low will all help.
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