Banks and other lenders regularly check your credit score to assess whether they should lend you money or extend you credit. Financial institutions prefer to lend to borrowers with good credit (usually defined as a credit score above 670). Finding your credit score is quick and easy, and it won’t affect your rating.
Will checking your credit score hurt?
The answer is basically no. It won’t hurt to check your current score or credit report in person. This is considered a soft inquiry and will have no repercussions. Whether a soft inquiry is conducted by you or a potential lender (for example, a credit card company looking for new customers), your credit score is safe as long as the inquiry was not the result of your application for a loan or other credit.
However, when a lender checks your credit report when you apply for credit, it’s considered a hard check. According to FICO, a major credit rating company, a hard inquiry will appear on your credit report and could lower your credit score by a few points — most likely below 5 points.
Important
By law, you are entitled to at least one free credit report from the three major credit bureaus every 12 months. You can find it on the official website, AnnualCreditReport.com. You can also get a free credit report within 60 days of receiving an adverse action notice (indicating that your credit application was denied). Credit reports are the basis for your credit score, but do not include it.
Tools You Can Use to Check Your Credit Score
How do I check my credit score? There are a variety of services and tools to choose from:
- Check to see if your bank or credit card issuer has provided a credit score. Many banks and credit card issuers allow their customers to view their credit scores for free. Some banks and credit card issuers also offer tools to predict the impact that certain changes to your accounts, such as late payments or credit limit increases, may have on your score.
- Sign up for an account on a free credit rating website. Many websites offer free credit scores. Some also offer credit monitoring services for a fee. These sites typically don’t require a paid subscription for basic credit score checks, but many charge for more advanced features. Keep in mind that you may have multiple credit scores based on different scoring systems, and the score you can get for free may not be the same as the others.
Soft and Hard Queries
As mentioned above, soft inquiries don’t affect your credit score. A hard inquiry, also called a hard pull, is different. It occurs when a financial institution pulls your entire credit report, with your permission, to determine if you’re a good candidate for a borrower. This may cause your credit score to drop slightly for a few months, although the inquiry will be listed on your report for about two years.
Soft Query Example
The following is an example of a soft query:
- Check your own credit. As we have noted, this has no effect.
- Existing creditors will check your credit. If you have a credit card or loan, your creditors may want to monitor your financial situation. Since this is not a new lender looking at your financial history, it will not affect your credit score.
- Your auto insurance company will review your credit file. The company that currently holds your auto insurance policy may perform a soft review of your credit report to set or adjust your annual premium. Since the mid-1990s, many insurance companies have used credit reports to determine a driver’s possible risk level, believing that the better the credit, the safer the driver.
Hard query example
Here are some examples of hard inquiries that could temporarily lower your credit score:
- You apply for a new credit card or loan. When you fill out a credit card or loan application, you are giving the creditor permission to access your full credit report.
- You apply for a credit increase from an existing creditor. In this case, the credit provider will prepare a new credit report to decide whether to approve your credit increase.
How often do credit scores change?
Because a credit score is a living record of a person’s financial history, it changes every day. Typically, your credit score is updated with new payments, changes in account balances, new credit inquiries, or fluctuations in outstanding debt. Credit reports are typically updated monthly.
Where is the credit inquiry report?
A credit inquiry will be reflected in your credit report with the three major credit bureaus: Equifax, Experian and TransUnion. They track your financial history, and lenders will also review your file.
What is a good credit score?
Credit bureaus and credit scoring companies use a variety of scoring systems, sometimes depending on the type of credit involved (for example, a car loan vs. a mortgage). FICO credit scores between 670 and 739 are generally considered “good,” with higher scores being “very good” or “excellent.” Scores range from 300 to 850. Any score below 580 is considered “poor.”
Bottom Line
Knowing your credit score can give you a good idea of your standing with current and future lenders. Regularly checking your credit score and your three credit reports will not affect your score and can usually be done for free.
