Does Getting a Free Credit Report Hurt Your Credit?

There are plenty of things you may worry about when checking your credit: Will I be able to understand my reports? Will I find mistakes or problems? Is my credit as good (or bad) as I think it is?

But one thing you don’t need to worry about is whether checking your credit reports or credit scores will hurt your credit. It won’t, as long as you do it the right way.

The Wrong Way…

The wrong way to check your credit for free is to ask a your bank, a mortgage lender or your friend who works at an auto dealer to pull your report for you. Another wrong way to see what’s on your report is to apply for a credit card you’re sure you won’t get because you happen to know that if your application is rejected you will be able to get a free copy of your credit report and your score as a result.

Sure those options are free, but when you get your credit report in one of those ways it creates what’s called a “hard inquiry” on the report that was accessed. That’s the type of inquiry that can affect your credit scores. While inquiries in general should only result in a small drop in your scores, if any, it’s still better to avoid them, especially since there is another way to review your credit data without impacting your credit.

The Right Way…

The right way to get your credit reports and scores is to request them yourself through a service that provides consumers with their credit information. This kind of request is called a “consumer initiated” request and will create what’s called a “soft inquiry.” This type of inquiry is not taken into account when your credit scores are calculated.

You can get your credit report from each of the three major reporting agencies once a year at AnnualCreditReport.com. In addition, you may be eligible for additional free copies if you are unemployed and looking for work or live in a state where by law you are entitled to additional free copies of your reports.

By the way, in the example above, if you are turned down for credit based on information in one of your credit reports, and you request the free report that you are entitled to under federal law, it’s the first inquiry — when you apply for credit — that will be a hard inquiry. The second one — when you ask for a copy of your report to review yourself — will be a soft inquiry.

Similarly, if you use a service that provides you with a credit score — you can do that for free at Credit.com, for example — it won’t affect your scores.

So feel free to check your credit reports and scores. At a minimum, you’ll want to review your reports once a year to make sure there are no problems, and consider monitoring your credit scores each month, which you can do for free.

Just be sure to do it the right way.