Why Checking Your Credit Score Can Lower It
Short answer
Checking your credit score can lower it only if a "hard inquiry" is made, which happens when a lender reviews your credit report after you apply for new credit. These inquiries signal potential risk and can cause a slight, temporary drop in your score. Simply checking your own credit score for personal use involves a "soft inquiry" and does not lower your score.
What Is a Credit Score and Why Does It Matter?
A credit score is a three-digit number, usually ranging from 300 to 850, that summarizes your creditworthiness based on your financial history. It helps lenders, landlords, and even some employers decide whether to trust you with money, a lease, or a job. The higher your credit score, the better your chances are of qualifying for loans, credit cards, and rental agreements with favorable terms like lower interest rates or smaller security deposits. For example, a higher credit score can help you secure a mortgage with a lower interest rate, saving thousands over time.
Understanding your credit score is a vital part of managing your financial health. It reflects your payment history, debt levels, length of credit history, new credit activity, and types of credit used. Keeping track of your score empowers you to make informed decisions about borrowing, saving, and budgeting. Since your credit score influences many areas of life, knowing how it works helps you avoid mistakes that might hurt it.
How Does Checking Your Credit Score Work?
When you check your credit score, your credit report is accessed by a company or lender. This access is called a "credit inquiry." There are two main types: soft inquiries and hard inquiries. A soft inquiry happens when you check your own credit score for personal reasons or when companies review your credit to preapprove you for offers. Soft inquiries do not impact your score.
A hard inquiry, however, happens when you apply for new credit, such as a credit card, car loan, or mortgage, and the lender reviews your credit report to decide whether to approve you. Hard inquiries can lower your score slightly because they suggest you might be taking on new debt.
Hypothetical Example:
Suppose you earn $3,000 a month and decide to apply for a new credit card. The card issuer performs a hard inquiry on your credit. This inquiry might reduce your credit score by 5 points for about 12 months. If you also check your own credit score through a free website before applying, that action is a soft inquiry and will not affect your score at all.
Knowing these differences helps you understand why your score might fluctuate and how to check it without damaging your credit.
Why Does a Hard Inquiry Lower Your Credit Score?
Hard inquiries lower your credit score because they indicate that you are seeking new credit, which can increase your financial risk. Lenders interpret this as a signal that you might be taking on more debt, which could make it harder for you to repay existing loans. Consequently, credit scoring models reduce your score by a small amount to reflect this increased risk.
The impact of a hard inquiry is usually minor, often just a few points, and temporary. It tends to disappear after about one year, though the inquiry stays on your credit report for up to two years. Multiple hard inquiries within a short time frame may have a greater effect because they suggest aggressive borrowing or financial strain.
For example, if you apply for several credit cards within a few months, each hard inquiry could chip away at your score, but if you space these applications out by several months or more, the impact is less severe.
What Is the Difference Between Soft and Hard Inquiries?
Understanding the difference between soft and hard inquiries is crucial to managing your credit score.
Soft inquiries occur:
- When you check your own credit score or report
- When a company pre-screens you for credit offers without your application
- When an employer runs a background check (with your permission)
- When existing creditors review your credit periodically
Soft inquiries do not affect your credit score in any way.
Hard inquiries happen:
- When you apply for a new credit card
- When you apply for a mortgage or auto loan
- When you apply for a personal loan or student loan refinancing
Hard inquiries can lower your credit score slightly. It’s important to limit hard inquiries by only applying for credit you truly need and spacing applications over time.
How Can You Check Your Credit Score Without Lowering It?
To monitor your credit score without hurting it, use services that perform soft inquiries. Many banks, credit card issuers, and free online platforms offer free credit score checks that do not affect your score. These tools allow you to keep track of your credit health regularly.
Additionally, you are entitled to a free credit report once every 12 months from each of the three major credit bureaus—Equifax, Experian, and TransUnion—through AnnualCreditReport.com. Ordering this report does not lower your credit score because it is considered a soft inquiry. Reviewing your credit report helps you spot errors, outdated information, or fraudulent activity.
Steps to Check Your Credit Safely:
- Visit a reputable credit monitoring website or your card issuer’s site.
- Confirm that the check is a soft inquiry before proceeding.
- Use AnnualCreditReport.com to order your free reports annually.
- Avoid applying for new credit just to see your score.
- Set reminders to check your credit reports regularly, such as every 3-6 months.
By following these steps, you can stay informed without risking your credit score.
What Should You Do If You See a Lower Score After Checking?
If your credit score drops after a hard inquiry from applying for credit, don’t worry—this is normal and usually temporary. Avoid making multiple credit applications in a short period to minimize further impacts. Focus on maintaining good habits, like paying bills on time and keeping balances low, to help your score recover.
If you notice a hard inquiry you don’t recognize, it might be unauthorized. Here’s what you can do:
- Review your credit report carefully to check for other signs of fraud.
- Contact the credit bureau reporting the inquiry to dispute it. You can say, “I did not authorize this credit inquiry and believe it is fraudulent.”
- Consider placing a fraud alert on your credit file to protect against identity theft.
- Regularly monitor your credit reports for new suspicious activity.
Taking these actions can help you correct errors and protect your credit health.
How to Maintain a Good Credit Score While Monitoring It
Regular credit monitoring is a smart financial habit that helps you stay on top of your credit health without damaging your score. To maintain a good credit score while monitoring it, follow these guidelines:
- Check your credit reports from the three bureaus at least once a year via AnnualCreditReport.com.
- Use free credit score tools that only perform soft inquiries to track your score more frequently.
- Limit new credit applications to only those you need. Space applications out by several months.
- Pay bills on time every month, as payment history is a major factor in your credit score.
- Keep credit card balances low relative to your credit limits—ideally under 30%.
- Avoid closing old credit accounts unnecessarily, as the length of credit history matters.
- Dispute any inaccurate or fraudulent information promptly with the credit bureaus.
By combining regular soft inquiry monitoring with responsible credit use, you can improve your score over time and avoid surprises.
Frequently asked questions
Will checking my credit score through a bank or credit card website hurt my credit?
No. Most banks and credit card companies provide free credit scores with a soft inquiry, which does not affect your credit score.
How long does a hard inquiry affect my credit score?
A hard inquiry can affect your score for about 12 months, but it remains on your credit report for up to two years.
Can multiple hard inquiries in a short time affect my score more?
Yes. Multiple hard inquiries in a short period can lower your score further, as they indicate increased credit risk. However, certain types of loan inquiries made within a short window may be treated as one inquiry.
How can I tell if a credit check is a soft or hard inquiry?
Ask the company before you agree to a credit check. If you're applying for new credit, it's likely a hard inquiry. If you’re just checking your own score or getting preapproved offers, it’s a soft inquiry.
What steps should I take if I find an unauthorized hard inquiry on my credit report?
Contact the credit bureau to dispute the inquiry, request a fraud alert on your file, and review your accounts for suspicious activity. Consider contacting a consumer protection agency or legal aid if needed.