Checking your credit score does not lower it, contrary to common misconceptions. However, if you apply for a credit card or loan, the prospective creditor’s act of pulling your credit report can temporarily lower your score.
While this is not true, it is somewhat understandable why you might think that. After all, we have all been warned against too many credit inquiries because they will bring down your score, right?
Well, yes and no. Let’s look at this a little closer and see if we can bring some clarity to a somewhat confusing topic.
How inquiries affect your credit
Anytime a credit score is accessed, it triggers something known as an “inquiry” or “pull” on your credit report. The type of pull has a direct bearing on the effect it will have on your credit score. There are two types: hard and soft.
A hard pull happens in response to you applying for a new credit card or a loan. It will affect your score because it signals that something may have changed in your financial life. For instance, you may be taking on new debt or perhaps considering doing so. Scoring models do not like uncertainty, so as a result, until your credit report stops changing, your score will reflect that uncertainty as a new risk factor and take some points off.
It is important to know that even if you are turned down, your score is going to reflect that hard pull in a negative way. This is why it is good to be fairly certain you will qualify anytime you apply for new credit.
If, on the other hand, you are accepted, your score may or may not be negatively affected. This is because you will pick up points by decreasing your credit utilization scoring factor, which may be enough to offset the hard pull impact by increasing your credit available. Either way, your score will likely reflect some effect from a hard pull, at least in the short term.
A soft pull occurs when you check your credit score, and it has virtually no impact on your score. Another example of a soft pull is the kind an existing credit card issuer, a prospective employer or a landlord might pull. Soft pulls are just a snapshot of your overall financial health. Simply checking doesn’t do a thing to your score.
What about those preapproved offers of credit you get in the mail? These, too, are obtained through a soft pull and again, that’s just someone looking at your credit report, not you actually applying for credit. But if you decide to take one of those preapproved offers, this will initiate a hard pull (since you are now actually applying for new credit) and will impact your score.
If you are curious about who is looking at your report, you can find that out when you get your credit report(s). Your credit report will list all inquiries by company name, so you can see who has accessed your credit through a soft pull. You should also know that this information will only be visible to you and that soft pull information is not available to anyone else who may look at your credit report.
See related: Should you look for ‘soft pull’ credit cards?
What affects your credit score?
There are five main components to your FICO score, which we have covered here before. In order of importance these are payment history (35%), credit utilization (30%), length of credit history (15%), credit mix (10%) and new credit (10%).
VantageScore uses the same information but weighs the components a bit differently, with available credit and new credit of somewhat more importance than payment history. But in relation to what we are talking about here, neither consider soft pulls in their algorithms.
How often should you check your credit score?
Since you don’t have to worry about any impact to your credit score, you can check it as often as you like. You could, in fact, check it every day.
While it is certainly a good idea to know where you stand on a regular basis, I would caution against becoming obsessed with what your score is at all times. This can lead to pursuing the perfect score of 850, which is a bit like a dog chasing its tail.
I believe in “good enough” credit, which I define as credit that is good enough to get you what you want at a rate you can live with. After all, despite what your mother may have told you, you are not perfect, so chances are your credit won’t be either!
An exception to the “good enough” credit rule is when you are about to apply for a significant loan or mortgage. Then more frequent monitoring of your credit score is in order.
See related: What is a good credit score?
How to check your score
As I said, you can check your score as often as you like, but in order to generate a credit score, your credit report must be accessed, and it could get pricey if you have to pay each time.
You are entitled to free copies of your credit reports weekly through April 2021 through AnnualCreditReport.com, but not free scores.
However, getting a free score is getting a lot easier since more and more creditors (over 200 at last count) now offer free scores as part of their product offering. You can check with your credit card company or lender to see if this is something they offer.
Remember to keep track of your score!