If you find yourself wondering “I want to check my credit, but won’t doing so hurt my credit score?,” well, here’s some good news: Contrary to popular belief, checking your own credit score or checking your own credit report doesn’t hurt your credit. Unlike credit-damaging “hard” inquiries that occur when you apply for credit, a personal credit check is considered a “soft” inquiry and has no impact on your credit report or your credit score.
That’s good to note since studies have shown regularly checking credit scores can improve your standing. In fact, a 2016 survey from Discover found 73% of people who conducted seven or more personal credit checks in a year said doing so had a positive impact on their credit behavior. (Conversely, only 44% of people who checked their credit once a year felt the same way.) On top of that, 76% of the regular checkers said their score greatly improved over the course of the year. Let’s break down why routinely monitoring your credit won’t harm your credit scores.
What’s in a Credit Score?
Your credit score — which is based on information in your credit report — is essentially a numerical representation of your ability to repay a loan as agreed. There are lots of different credit scores out there, but most are based on the same five factors:
- Payment history, which accounts for 35% of your score;
- Amounts owed or your credit utilization, which accounts for 30% of your score;
- Length of credit history, which accounts for 15% of your score;
- Types of credit, which accounts for 10% of your score;
- Account inquiries, which account for 10% of your score.
That last category is where credit checks or, as you may hear experts call them, “credit inquiries” come in: Generally, the more credit inquiries you have in a short period of time, the larger the impact to your credit score — but it’s the type of inquiry that matters here.
Hard Inquiries vs. Soft Inquiries
There are two different types of credit inquiries — a hard inquiry, which occurs whenever you apply for credit; and a soft inquiry, which is what occurs whenever you access your own credit report. Let’s break it down a bit further.
Whenever you apply for credit, whether it’s a for credit card, an auto loan, a mortgage or any other type of credit, the lender will typically pull your credit report and score as part of the application process. This application process helps lenders determine whether they will approve the loan and at what interest rate and terms. Each time you apply for credit and a lender pulls your credit report and/or score, a “hard” inquiry will be reported in your credit report, indicating that you’ve actively applied for new credit. It’s these hard inquiries that can lower your credit score by a few points. Each hard inquiry can stay on your credit report for up to two years, but they generally only affect your score for the first 12 months, and the impact gets smaller throughout that first year.
Soft inquiries, on the other hand, are generated when you check your own credit or an institution pulls a pre-approval or promotional inquiry to pre-qualify you for a marketing offer. They can also be generated when an employer conducts a background check. These inquiries may appear on your credit report, but they won’t affect your credit score, since they’re not related to an active search for financing.
Now that you know that checking your own score won’t hurt your credit, you can check yours as often as you like. By law, you’re entitled to check your credit reports from each major credit reporting agency for free once a year. You can do so by visiting AnnualCreditReport.com or by calling 1-877-322-8228. You can also view two of your credit scores for free at Credit.com to keep an eye on your credit more regularly.