When I Check My Credit Score, Does It Affect It?

Introduction

As a responsible consumer, it’s essential to keep track of your credit score regularly. A credit score is a numerical representation of your creditworthiness, and it’s a crucial factor that lenders consider when evaluating credit applications. However, many people are unsure if checking their credit score can impact it. In this article, we’ll explore the relationship between checking your credit score and how it affects it.

Understanding Credit Score Inquiries

Before we delve into the impact of checking your credit score, it’s essential to understand credit score inquiries. There are two types of credit score inquiries: hard inquiries and soft inquiries.

Types of Credit Score Inquiries

A hard inquiry occurs when a lender or creditor checks your credit report to make a lending decision. Examples of hard inquiries include applying for a credit card, car loan, or mortgage. On the other hand, a soft inquiry occurs when you check your credit score or when a lender checks your credit for pre-approval purposes.

Soft Inquiries vs. Hard Inquiries

The primary difference between soft and hard inquiries is the impact they have on your credit score. A hard inquiry can temporarily lower your credit score by a few points. In contrast, a soft inquiry doesn’t affect your credit score at all. Soft inquiries are not visible to lenders and don’t impact their decision-making process.

In summary, while both types of credit score inquiries exist, hard inquiries are the only ones that can negatively impact your credit score. Soft inquiries, on the other hand, are harmless and shouldn’t cause any concern when checking your credit score.

Impact of Soft Inquiries on Credit Scores

Soft inquiries don’t impact your credit score, but they can provide valuable information about your credit history. For example, checking your credit score regularly can help you detect any errors or fraudulent activity. Additionally, soft inquiries can help you monitor your credit utilization, which is the amount of credit you’re using compared to your credit limit.

When you check your credit score, it’s considered a soft inquiry, and it’s not visible to lenders or creditors. Soft inquiries are only visible to you, and they don’t affect your credit score in any way. Therefore, you can check your credit score as often as you like without worrying about any negative consequences.

Impact of Hard Inquiries on Credit Scores

Unlike soft inquiries, hard inquiries can impact your credit score. When you apply for a new credit card, loan, or other credit-related products, a lender will likely perform a hard inquiry. The impact of a hard inquiry on your credit score depends on several factors, such as the number of recent hard inquiries, the type of credit you’re applying for, and your credit history.

A single hard inquiry typically results in a temporary decrease in your credit score by a few points. However, multiple hard inquiries within a short period can have a more significant impact on your credit score. Furthermore, if you have a limited credit history or a low credit score, a hard inquiry can have a more significant impact on your credit score.

In conclusion, hard inquiries can negatively impact your credit score, so it’s essential to limit the number of hard inquiries you have. Before applying for any new credit-related products, it’s crucial to research and choose the ones that best fit your needs. Checking your credit score regularly using a soft inquiry won’t impact your credit score at all, and it’s an excellent way to monitor your credit history.

Exceptions to Credit Score Inquiries Impact

While hard inquiries typically affect your credit score, there are some exceptions. Here are a few examples:

Employment Inquiries

When you apply for a job that requires a credit check, the employer may conduct a hard inquiry on your credit report. However, this inquiry won’t affect your credit score since it’s not related to a credit application.

Rate Shopping

When you’re shopping for a loan, such as a mortgage or auto loan, multiple lenders may check your credit report. However, credit bureaus recognize that you’re rate shopping and will group these inquiries into a single inquiry. This means that multiple inquiries within a short time frame will only count as one inquiry and won’t significantly impact your credit score.

Account Review

If you’re an existing customer of a financial institution, they may conduct periodic account reviews. These reviews involve checking your credit report, but they’re considered soft inquiries and won’t affect your credit score.

Conclusion

In conclusion, checking your credit score through a soft inquiry won’t affect your credit score. However, applying for credit and having a lender conduct a hard inquiry can temporarily lower your credit score. It’s crucial to understand the difference between the two types of inquiries and how they impact your credit score. Regularly monitoring your credit score is essential for maintaining a healthy credit profile and improving your financial health. At Wiki Mic, we encourage our readers to stay informed and take control of their financial futures by understanding how credit works and how to maintain a good credit score.