The first step of any credit-related mission is getting your credit score. That poses the question — “Does checking my credit score hurt my credit score?” The notion that checking your credit score affects your score is a common one, but it’s false. Checking your own credit score doesn’t hurt your credit, but that doesn’t mean every inquiry is safe. Credit-damaging “hard” inquiries occur when you apply for credit and can impact your credit score, unlike the soft inquiries that occur when you check your credit score or credit report.
The fact that checking your credit score causes no harm is great news, since studies have shown checking your credit score often can improve your standing. In fact, a 2017 survey from Discover found 70% of people who conducted 12 or more personal credit checks in a year said doing so positively impacted their credit behavior. Even 64% of those who checked their credit score between seven and 11 times felt the same way. Conversely, only 31% of people who checked their credit once a year felt the same way. Those who checked their score 12 or more times were almost twice as likely to improve their credit than those who checked their score once. Even better? Those who checked their credit score the most were most likely to report improvements to their score. Those who checked their credit score most often were also more likely to report improvements to their score. Not only will checking your credit score not harm your credit, but also it can help you improve it. All improvements aside, let’s break down why routinely monitoring your credit won’t harm your credit scores.
What’s in a Credit Score?
Your credit score is based on information from your credit report. Essentially, it’s a numerical representation of your ability to repay a loan as agreed. It’s also a representation of your reliability when it comes to using and utilizing credit. There are many different credit scores, different models and different types of 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 or new credit, which account for 10% of your score.
The first four categories are not impacted by checking your credit score. Payment history focuses on bills you’ve paid on time. Amounts owed, or credit utilization, keeps track of the money you owe and how the credit you have is being used. Length of credit history is the averaged amount of time your lines of credit have been open. Types of credit looks at the various types of credit cards, loans and accounts. It rewards variety as it shows you can handle multiple types of credit. The last category is the focus here. This is where credit checks or, “credit inquiries” come into play. 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 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. Although they eventually disappear, it’s best to avoid excessively shopping around for new credit cards or applying to lolans. The more hard inquiries you rack up, the bigger the hit on your credit score can be.
On the other hand, soft inquiries 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, unlike hard inquiries, can also occur without your permission. Soft 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. Since checking your credit score qualifies as a soft inquiry, it does not harm your credit score. Checking your credit score can only help.
Now that you know that checking your own score won’t hurt your credit, you can check yours as often as you like. Plus, since it is also a soft inquiry, checking your credit report won’t harm your credit either. 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.
Paige DiFiore contributed to this article. This article was last updated June 7,2017. This article was originally published October 24, 2016.