Does Checking Your Credit Score Hurt Your Score?

Many people are concerned about their credit scores, understanding that these numbers play a crucial role in their financial lives. One common question is whether checking your credit score can negatively impact it. The short answer is: No, checking your own credit score does not hurt your score. However, the full story involves understanding different types of credit inquiries and how they interact with your credit report.

Types of Credit Inquiries

There are two types of credit inquiries that can occur when someone accesses your credit report: hard inquiries and soft inquiries.

1. Hard Inquiries (Hard Pulls)

   Hard inquiries occur when a lender or credit card issuer checks your credit report to make a lending decision. These checks are typically done when you apply for a new credit card, mortgage, auto loan, or any other type of credit. Hard inquiries can impact your credit score because they suggest that you are looking to borrow money, which may increase your credit risk.

   • Impact on Credit Score: A hard inquiry can lower your credit score by a few points, typically ranging from 5 to 10 points, depending on your overall credit history. Multiple hard inquiries in a short period can have a more significant impact, particularly if your credit history is short or contains negative information.

   • Duration of Impact: The impact of a hard inquiry is temporary. It generally remains on your credit report for two years but affects your score only for the first 12 months.

2. Soft Inquiries (Soft Pulls)

   Soft inquiries occur when you check your own credit score or when a company checks your credit report for purposes other than lending, such as pre-approving you for a credit card offer. Unlike hard inquiries, soft inquiries do not affect your credit score.

   • No Impact on Credit Score: Soft inquiries are not considered in credit score calculations, so you can check your credit score as often as you like without worrying about any negative impact.

   • Examples of Soft Inquiries: These include checking your own credit, employer background checks, and pre-qualification checks by lenders.

Why It's Important to Check Your Credit Score Regularly

Regularly checking your credit score is a good practice for several reasons:

• Monitoring for Fraud: By frequently reviewing your credit report, you can quickly spot any unauthorized or suspicious activities, such as new accounts you didn't open or hard inquiries you didn't authorize.

• Understanding Your Financial Health: Knowing your credit score gives you insight into how lenders might view your financial situation, helping you make informed decisions when applying for new credit.

• Improving Your Credit Score: When you understand the factors affecting your credit score, you can take steps to improve it, such as paying down debt, reducing credit card balances, or disputing errors on your report.

Factors That Actually Affect Your Credit Score

While checking your credit score doesn’t lower it, other factors do. Understanding these can help you maintain or improve your score over time.

1. Payment History (35% of your score)

   Your payment history is the most significant factor in your credit score. It shows whether you've paid your bills on time. Late or missed payments can have a substantial negative impact on your score.

2. Credit Utilization (30% of your score)

   Credit utilization refers to the percentage of your available credit that you're currently using. Lower credit utilization is better for your credit score. Ideally, you should aim to keep your utilization below 30%.

3. Length of Credit History (15% of your score)

   The length of time you've had credit accounts open also affects your score. A longer credit history generally leads to a higher score, as it gives lenders more information about your credit behavior over time.

4. New Credit (10% of your score)

   This factor considers the number of new accounts you've opened recently and the number of recent hard inquiries. Opening several new accounts in a short period can lower your score, as it suggests higher risk.

5. Credit Mix (10% of your score)

   Having a variety of credit types—such as credit cards, installment loans, and mortgages—can positively affect your score, as it shows you can manage different types of credit responsibly.

How Often Should You Check Your Credit Score?

It's a good idea to check your credit score at least once a year. However, many experts recommend checking it more frequently—especially if you're planning to apply for a loan or credit card soon. Here are some guidelines:

• Annually: At a minimum, review your credit report annually through free resources like AnnualCreditReport.com to ensure there are no errors or fraudulent activities.

• Before Major Financial Decisions: If you're planning to apply for a mortgage, car loan, or any significant credit product, check your score a few months in advance. This gives you time to address any issues that could affect your approval or interest rates.

• Monthly: Many credit card companies now offer free monthly credit score updates as a cardholder benefit. Taking advantage of this allows you to track your score closely and react to any changes promptly.

Common Misconceptions About Credit Scores

1. Checking Your Credit Often Will Lower Your Score: As discussed, this is a myth. Soft inquiries from checking your own score don’t affect your credit at all.

2. Closing Credit Cards Will Improve Your Score: This can actually hurt your score by reducing your available credit and increasing your utilization ratio. It also shortens your credit history, which can negatively affect your score.

3. Paying Off Debt Instantly Boosts Your Score: While paying off debt is beneficial in the long term, it may not lead to an immediate score increase. Other factors, like your credit utilization and history, will continue to play significant roles.

4. You Have to Carry a Balance to Build Credit: Carrying a balance does not help your credit score. Paying off your credit card in full each month is the best practice, as it avoids interest charges and keeps your utilization low.

What to Do If Your Credit Score Drops After a Hard Inquiry

If your credit score drops after a hard inquiry, don’t panic. Here’s how you can manage it:

• Give It Time: The effects of hard inquiries fade over time, usually within a few months. Focus on maintaining good credit habits, and your score should recover.

• Avoid Multiple Applications: If possible, avoid applying for multiple credit products in a short period. Each hard inquiry can slightly lower your score.

• Monitor Your Credit Report: Ensure there are no errors or fraudulent activities on your report. If you find any discrepancies, dispute them with the credit bureau.

• Improve Other Factors: Work on improving other areas of your credit score, such as paying down balances, to offset the impact of the inquiry.

Conclusion

Checking your credit score is a vital part of managing your financial health, and it does not hurt your score. Understanding the difference between hard and soft inquiries, regularly monitoring your credit report, and taking steps to improve your score can help you maintain strong credit. Remember, while hard inquiries can temporarily lower your score, they are just one of many factors that influence your overall credit health.