There are many things you can do that might hurt your credit score – such as paying a bill late, charging up too much credit card debt, or having a public record like a foreclosure or judgment mar your credit report.
Fortunately, however, doing something like checking your own credit report will NOT lower your credit score. But there are times when an outsider’s check of your credit history can hurt your credit rating.
Here’s an explanation of why checking your own credit history isn’t bad at all for your credit score, yet your credit score can take a hit when creditors and potential lenders pull your credit.
For starters, it’s important to understand the two different types of “inquiries” that occur when someone reviews a credit report.
When you pull your own credit – say, just because you want to keep tabs on your credit health – that is what’s known in the credit industry as a “soft” inquiry or a “soft” pull.
A soft pull does not lower your credit score at all. In fact, if you chose to check your credit history once a month, or even once a week, it would not damage your credit rating or lower your credit score in any way.
As a consumer, you have the right to do regular checks of your own credit history. Every adult in this country can and should check his or her credit report at least once a year. I think monthly credit monitoring is even better.
But by law, you are entitled to get one free copy of your credit report once every 12 months from each of the three main credit bureaus: Equifax, Experian and TransUnion.
(Related reading: How to Compare Your Equifax, Experian and TransUnion Credit Reports)
To get your free credit reports just go to annualcreditreport.com. That’s the government-mandated website where you can check your credit history at no charge. You don’t have to give up a credit card number or enroll in credit monitoring. You simply have to provide some identifying information and prove who you are in order to get a look at your credit files.
What Happens When Creditors Review Your Credit Files?
There’s another type of credit pull that can be considered a “soft” pull in the sense that it doesn’t hurt your credit score. That’s the kind of inquiry or pull that occurs when one of your existing creditors wants to review your credit data.
For instance, you might have a bank-issued Visa card and your bank wants to see whether or not to extend another credit card offer to you, or perhaps to increase your current line of credit.
Under these circumstances, your current creditor is simply reviewing your payment history (i.e. your credit files) as it pertains to your payment track record with both that bank, as well as your other creditors too. Again, this kind of review is essentially a “soft” inquiry – and it doesn’t hurt your credit score.
The Difference Between a Hard Inquiry and a Soft Inquiry
There is another type of credit inquiry, however, that can and typically does lower your credit score. That’s a “hard” inquiry or a “hard” pull.
Anytime you apply for credit or seek a loan of any kind, you’re giving a creditor permission to pull your credit files from any or all of the major credit bureaus. This credit pull is a “hard” pull and this credit inquiry will usually impact your credit score.
How much will a hard inquiry impact you?
Experts from Fair Isaac Corp., the company that created FICO credit scores, say that inquiries account for about 10% of your overall FICO credit score.
In the past, officials from the Mortgage Bankers Association have said that a single inquiry can lower your credit score by anywhere from 1 to 35 points.
Depending on your perspective, you may consider an inquiry to play a “minor” role in your overall credit score, or you may view credit inquiries as quite significant.
Regardless of your viewpoint about the severity of the impact caused by a “hard” inquiry, it’s also important to note the length of time that an inquiry will linger.
An inquiry stays on your credit report for two years and it counts against you, for the purpose of your FICO score calculation, for one year.
This is one reason that I recommend that you only apply for credit when you really and truly need it.
So the bottom line is this: checking your own credit is deemed to be a “soft” pull or a soft inquiry; that doesn’t hurt your credit score at all. Nor does a passive review of your credit by existing creditors.
However, if you fill out an application or seek credit in any format – say, you try to obtain a new credit card, a mortgage, an auto loan or a student loan – then that action will generate a “hard” inquiry and it will likely lower your credit score.
The exact extent to which a hard inquiry will impact your credit score depends on a lot of other factors, such as the length of your credit history, how much credit activity you’ve recently had, and more.