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Does Checking Your Credit Lower Score Lower It?

Your credit score is an important financial metric that can have a significant impact on your life. Good credit makes it easier to qualify for loans and makes borrowing money cheaper by reducing the interest you pay. If you have poor credit, you’ll have to pay higher interest rates when you get a loan or might have trouble borrowing money at all.

Checking your credit report regularly can help you have an idea of the loans and credit cards you can qualify for, as well as what you need to do to boost your score. It’s also a good way to monitor for identity theft or to notice incorrect information on your credit report.

When a lender checks your credit, it usually reduces your credit score by a few points. However, checking your score on your own is typically safe. Let’s explore why.

What Is a Credit Inquiry?

Your credit report contains a history of your interaction with credit and debt. That includes information about your history of making on-time versus late payments, the amount of debt you have, how many loans and credit cards you have open, and recent applications for credit.

When you apply for a credit card or a loan, the lender usually reaches out to one of the three major credit bureaus — Experian, Equifax, and Transunion — to ask for a copy of your credit report. The lender uses the information in that report to make its lending decision and to set the interest rate if it decides to offer a loan.

The credit bureau that supplied your credit report makes a note of that application on your credit report. Other lenders who request a copy of your credit report from that credit bureau can see your recent application for a loan through that note.

Hard Inquiries vs. Soft Inquiries

When a lender asks a credit bureau for a copy of your credit report to make a lending decision, that’s called a hard inquiry. Hard inquiries show up on your credit report, and other lenders that check your credit can see hard inquiries in your credit history.

Lenders don’t check your credit only when you apply for a new loan. Lenders can check their customers’ credit at any time and often do so when the borrower asks for an increased credit limit or as part of regular risk assessments of their borrowers.

Individuals can also check their own credit reports using the many free credit tracking apps and websites on the market. These apps need to reach out to the credit bureaus to request copies of customers’ credit reports, but aren’t using those reports to make lending decisions.

In general, when you ask a credit bureau for a copy of your own credit report, it’s counted as a soft inquiry. Occasions when a lender checks someone’s credit to pre-approve them for an offer or as part of regular risk assessments — rather than as part of an application for a new loan or credit card — also count as soft inquiries.

Soft inquiries do not appear on credit reports, which means they don’t affect credit scores. This means that you can safely check their own credit reports without having to worry about damaging your credit.

How Credit Inquiries Affect Your Credit

Each hard inquiry on your credit report drops your score by a few points, usually between five and 10 points. One hard inquiry won’t have a large impact on your score, but they can quickly add up, so having lots of inquiries on your report can really damage your score.

This is because frequent applications for loans are a red flag for lenders. Someone who needs to borrow money repeatedly is likely to be having financial difficulties, meaning they’ll struggle to repay their loans.

The impact of each credit inquiry decreases over time. After a few months, an inquiry’s impact is relatively small and is usually offset by other positive factors on the credit report.

Credit inquiries stay on a credit report for two years, after which they fall off the report. That means that each inquiry only affects a person’s credit score for a maximum of two years.

Reducing the Impact of Credit Inquiries

People who are applying for large loans, like mortgages or auto loans, often want to shop around and get offers from multiple lenders so they can find the best deal. Even a small difference in the interest rate on a large loan can save thousands of dollars over the life of a mortgage, so shopping around is more than worth the effort.

Credit bureaus and FICO, the company behind the most popular credit scoring models, understand the importance of rate shopping, so most scoring models account for it when generating your credit score.

Depending on the model used, all credit inquiries for loans like mortgages, auto loans, or student loans that happen within a 14- to 45-day period are combined when calculating credit scores. If someone applies for four mortgages in a week, it will only count as a single hard inquiry.

That means you don’t have to worry about tanking your credit by shopping for the best interest rates when applying for a large loan.

Does Checking Your Credit Lower Your Credit Score?

The majority of credit monitoring apps, websites, and services use soft inquiries to check your credit report and provide that information to you. That means it’s safe to check your credit using one of these services.

Credit bureaus only take note of hard inquiries into your credit by lenders making lending decisions. Soft inquiries do not impact your credit score or appear on your credit report.

Final Word

Healthy credit is an essential part of healthy finances. Your credit impacts your ability to borrow money and how much interest you have to pay.

If you want to keep track of your credit score, there are many services you can use to help, all without impacting your credit. One way to keep your score high is to only apply for loans and credit cards that you need, which reduces the number of inquiries that show up on your credit report.

TJ Porter
TJ is a Boston-based writer who focuses on credit cards, credit, and bank accounts. When he's not writing about all things personal finance, he enjoys cooking, esports, soccer, hockey, and games of the video and board varieties.

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