Why Checking Your Credit Score Can Hurt It
Short answer
Checking your credit score can hurt it only when a "hard" inquiry is made by lenders during credit applications, causing a slight, temporary drop. However, checking your own credit score through "soft" inquiries does not harm your credit. Understanding these differences helps you manage your credit wisely and avoid unnecessary score decreases.
What Is a Credit Score and How Does Checking It Work?
A credit score is a three-digit number that summarizes how reliable you are at paying back borrowed money. It is based on information in your credit report, such as your payment history, amounts owed, length of credit history, new credit, and types of credit used. This score helps lenders decide if they want to loan you money, the interest rate they will charge, and how much credit to extend.
When you check your credit score, two types of credit inquiries may occur: soft and hard inquiries. A soft inquiry happens when you check your own credit score or when companies check your credit for reasons unrelated to lending decisions, such as pre-approved credit offers. Soft inquiries are harmless and do not affect your credit score.
Hard inquiries occur when you apply for new credit, like a mortgage, car loan, or credit card, and the lender checks your credit report to assess your risk. These hard inquiries can lower your credit score by a few points for a short period because they indicate you are seeking new credit, which might increase your credit risk.
Example
Imagine you apply for a new credit card. The card issuer requests your credit history to decide whether to approve your application. This request is a hard inquiry, which may reduce your credit score by 5 points for about six months. On the other hand, if you check your credit score on a free app or through your bank’s website, that’s a soft inquiry and won’t affect your score at all.
Understanding the difference between these two types of inquiries is essential for managing your credit health effectively.
Why Do Hard Inquiries Lower Your Credit Score?
Hard inquiries lower your credit score because they indicate to lenders that you’re seeking new credit, which might mean you’re facing financial stress or taking on new debt. When multiple hard inquiries show up in your credit report within a short timeframe, it can signal increased risk, causing lenders to hesitate.
Credit scoring models incorporate hard inquiries as a factor because new credit applications can increase your debt burden, which impacts your ability to repay. The scoring systems view multiple inquiries as a risk factor because it might mean you are overextending yourself financially.
The impact of a hard inquiry is generally small, often reducing your credit score by only a few points. This drop tends to be temporary and usually fades within 12 months, while the inquiry remains on your report for two years. However, frequent hard inquiries can compound this effect and cause more significant score drops.
Additional Insight:
Some credit scoring models treat multiple inquiries for the same type of loan within a short period (usually 14 to 45 days) as a single inquiry to allow for rate shopping. This means if you’re shopping for a mortgage or car loan, the impact on your score is limited, as these inquiries are grouped together.
How Does This Affect You When Managing Your Credit?
Knowing how hard and soft inquiries affect your credit score helps you make smart credit decisions. Since hard inquiries can lower your score, it’s best to limit the number of times you apply for new credit. Applying for several credit cards or loans within a short period can reduce your creditworthiness in the eyes of lenders.
For example, if you want to buy a car and need financing, try to do your loan applications within a two-week window to minimize the impact of multiple hard inquiries. This way, credit scoring models will typically count these as one inquiry instead of several.
Meanwhile, regularly checking your own credit score through soft inquiries provides valuable information without harming your credit health. This allows you to spot errors, monitor changes, and be prepared for large financial decisions.
Taking control of when and how often you apply for credit can help maintain or improve your credit score, ultimately leading to better loan terms, lower interest rates, and easier approval.
What Other Terms Are Often Confused with Checking Credit Scores?
Many people confuse credit inquiries with other credit-related terms, leading to misunderstandings about credit health. Here are some common terms to clarify:
- Credit Report: This is a detailed record of your borrowing and repayment history, including credit accounts, balances, payment history, and public records. Checking your credit report through authorized sources usually does not affect your credit score.
- Credit Monitoring: This service tracks your credit report and score over time, often sending alerts about significant changes. Most credit monitoring services use soft inquiries, so they don’t impact your score.
- Soft Inquiry: A credit check that does not impact your credit score, such as when you check your own credit or a company reviews your credit for promotional purposes.
- Hard Inquiry: A credit check triggered by your application for new credit, which may lower your credit score temporarily.
By understanding these terms, you can better manage your credit activity and avoid unnecessary anxiety about checking your credit.
How Can You Check Your Credit Score Without Hurting It?
To check your credit score safely, use services that perform soft inquiries. Many banks, credit card companies, and third-party websites offer free credit scores updated regularly via soft pulls. For example, if you log into your credit card account online, you may find your current credit score available—checking this will not affect your score.
You can also get a free credit report annually from AnnualCreditReport.com, which provides your credit reports from the three major credit bureaus without lowering your credit score. Reviewing your credit report helps you spot inaccuracies or fraudulent accounts that might harm your credit.
Tips for Checking Your Credit Score Safely:
- Avoid applying for new credit just to check your score.
- Use reputable websites or apps that clearly state they use soft inquiries.
- Check your credit reports at least once a year from all three bureaus.
- Consider credit monitoring services if you want continuous updates without hard pulls.
By following these steps, you can stay informed about your credit situation without risking a score drop.
What Steps Should You Take Next to Protect and Improve Your Credit Score?
- Regularly Monitor Your Credit: Use free soft inquiry services to check your score monthly or quarterly. This helps you track progress and detect issues early.
- Limit New Credit Applications: Only apply for credit when necessary, and space out applications to minimize hard inquiries.
- Review Your Credit Reports: Obtain your reports annually from all three major credit bureaus to check for errors, fraudulent accounts, or outdated information.
- Dispute Any Errors Promptly: If you find inaccuracies, contact the credit bureau with supporting documentation to correct your report.
- Build Credit Responsibly: Make payments on time, keep credit utilization low (preferably below 30%), and avoid closing old accounts unnecessarily.
- Plan Big Purchases in Advance: If you anticipate needing a loan, check your credit score in advance and allow time for your score to recover from any hard inquiries.
By following these practical steps, you can maintain a healthy credit score and reduce the chances of surprises when applying for credit.
Why Does Understanding This Matter for Everyday Financial Health?
Your credit score influences many parts of your financial life. It affects your ability to get approved for loans, qualify for the best interest rates, rent an apartment, or even secure a job in some cases. A small drop in your credit score caused by unnecessary hard inquiries can lead to higher borrowing costs or denial of credit.
By knowing how credit checks work and which types hurt your score, you can take control of your financial reputation. This knowledge helps you avoid pitfalls like applying for multiple credit cards at once or checking your credit score through services that perform hard inquiries.
Managing your credit wisely saves money in interest payments and reduces stress. It also opens doors to better financial opportunities and long-term stability.
Frequently asked questions
Can checking my own credit score ever hurt it?
No, checking your own credit score results in a soft inquiry, which does not affect your credit score. Only hard inquiries from lenders during credit applications can lower your score.
How long does a hard inquiry impact my credit score?
Hard inquiries typically affect your credit score for up to 12 months, with the greatest impact in the first few months. They remain on your credit report for about two years but do not influence your score after a year.
Are multiple hard inquiries for the same loan treated differently?
Yes, credit scoring models often group multiple hard inquiries for the same type of loan within a short window (14-45 days) as a single inquiry, minimizing the impact on your score.
Is checking my credit report the same as checking my credit score?
No, a credit report is a detailed history of your credit accounts and activity, while a credit score is a numerical summary of that history. Checking your credit report usually involves a soft inquiry and does not lower your score.
How can I check my credit without lowering my score?
Use services that perform soft inquiries, such as checking your score through your bank, credit card issuer, or reputable websites. Also, get your free annual credit reports from AnnualCreditReport.com.
What should I do if I notice errors on my credit report?
Contact the credit bureau that issued the report, provide documentation of the error, and request a correction. Correcting inaccuracies can improve your credit score.