Credit and credit scores rely on multiple factors, and it's easy to get confused about which actions do and do not impact your credit. If you check your credit score, does it go down? Thankfully, the answer is no.
If you're checking your own credit, a soft inquiry is used, which doesn't impact your credit score at all. In fact, regularly checking your credit can help you keep your credit history in good shape.
The Credit Score Impact of Checking Your Credit
A credit inquiry will be placed on your credit report when your credit information is requested. That said, checking your credit isn't going to harm your credit score, says Steve Weisman, attorney and senior lecturer in law, taxation and financial planning at Bentley University. But why?
Not all credit inquiries are treated the same. There are two types of inquiries: soft and hard credit inquiries. Soft inquiries do not affect your credit score, but hard inquiries can.
Soft Inquiries Don't Hurt Your Credit Score
A soft inquiry, sometimes called a soft pull, does not affect your credit score. One example of a soft inquiry is checking your own credit, says Can Arkali, senior director, scores and predictive analytics at FICO.
Soft inquiries can be made by companies, too. You may give companies permission to make soft pulls on your credit report when you sign up for an account or service.
For example, many websites give you a free credit score in exchange for access to your credit report and the ability to advertise to you. Or a lender or credit card company will do a soft credit check if you ask for a preapproval before you officially apply for a product.
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You may also give a potential employer permission to check your credit. "It's very common for employers to check out someone's credit report," says Weisman. This type of credit check results in a soft inquiry.
Other soft inquiries could come from companies you did not give direct permission to, such as those who prescreen potential customers for credit-related products , including credit cards, personal loans or home equity lines of credit.
Why Does a Lender Checking Your Credit Score Lower It?
The other type of inquiry is a hard inquiry. "FICO scores only consider the hard inquiries and hard pulls" when calculating your credit score, says Arkali. Hard inquiries occur when a lender checks your credit information as part of an application for credit.
Lenders do a hard credit inquiry when you apply for a credit card, car loan, personal loan, mortgage or other credit products. Hard inquiries may also show up on your credit report when you apply to rent an apartment or open a bank account.
Weisman says, "Hard inquiries generally would not be as significant a factor (in your score) as whether you're paying your bills on time, how much of your open credit you've used or the length of your credit history." For some borrowers, a hard credit inquiry has little to no impact on their score. However, hard inquiries could have a greater effect if you have a limited credit history or have several inquiries in a short period.
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You should be aware there are different credit scoring models. Arkali says, "Out in the market, there are several widely used scores including FICO Score 8 and 9." Other credit scoring models, such as VantageScore, have many variations, too. While each model uses information from your credit report to generate a score, each version does so in a unique way.
With multiple credit scoring models, you can't be sure how much a single hard inquiry will change your score. Still, a single hard inquiry could initially lower a credit score by about five points using FICO's models, but the negative change will lessen over time, says Arkali.
Why Do Hard Inquiries Affect Your Credit Score?
Credit scoring models are meant to predict financial behaviors so lenders can factor the risk of default when granting credit. The models don't treat all hard inquiries the same. For example, the most recent FICO scoring models allow a 45-day period to rate shop for an auto loan or mortgage, says Arkali. All inquiries during the rate shopping period related to the same type of loan will typically be combined into a single inquiry, which reduces the negative effect on your credit score.
On the other hand, if you begin applying for many credit cards or different types of credit within a short time, the credit scoring models may see your activity as a high credit risk. This would result in a larger drop in your score than a single inquiry.
Should You Check Your Credit Regularly?
"Monitoring your credit is critical today and perhaps even more so in the last year than ever before in the wake of major data breaches," says Weisman. You can check your credit report from each of the three major credit bureaus once per year for free. To request your free credit reports, visit AnnualCreditReport.com.
While all three credit bureaus generally have the same information, they gather information separately and may not have the same exact data. When a company is making a credit decision, it may use a credit score from just one bureau or scores from all three bureaus.
Arkali says, "The FICO score itself really is a direct reflection of the information captured in your credit report. If there are any mistakes in that credit report ... all of those factors could actually be considered by the FICO score's calculation." If there is an error on any of your reports, it could hurt your chances of getting the best interest rates. For that reason, it's important to carefully review each of your credit reports for errors.
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"It's always good to make sure that you check for any inaccuracies or any incomplete, incorrect information that may be on your credit report," says Arkali. When reviewing your credit report, you'll want to check that your payment history is accurate, that your lines of credit reflect the proper amounts and that the amount of credit used is correct. If you find an error, you can contact the creditor to try to resolve the problem. You can also dispute the error with the credit bureau.
You should also look for accounts you don't recognize. Weisman says, "If someone has your personal information and Social Security number, that can be used to obtain credit in your name, which would appear on your credit report." If you find an unknown account, look into it immediately. Monitoring your credit doesn't prevent you from becoming a victim of identity theft, but it does enable you to find out sooner so you can start repairing the damage, says Weisman.
How Often Should You Check Your Credit Score?
You should be checking your credit with each of the three major bureaus once per year at a minimum. You could use your three free credit reports to strategically check your credit with a different bureau every four months -- say, TransUnion today, then Experian in four months and Equifax in another four months. Since all three bureaus aim to collect the same information, this gives you a chance to check for fraudulent activity more frequently.
If you're about to take out a major loan , such as a mortgage or an auto loan, you should check all three of your credit reports for errors before you apply.
Besides the free credit reports you can request through AnnualCreditReport.com, many credit cards offer free FICO scores. Additionally, some websites offer free access to credit reports and free credit scores, albeit with advertising for credit offers. Ideally, Weisman says, you should check your credit report every month or two.
Updated on Nov. 15, 2019: This story was originally published on an earlier date and has been updated with new information.
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