Does Checking My Credit Score Lower My Credit?
There are many reasons you should check your credit. By doing so, you’ll know where you stand financially and understand what types of loans you might qualify for. If you’re asking yourself whether checking your credit score lowers it, you’ve come to the right place. Below, we’ll dive deeper into credit scores and answer this very common question.
How your credit score works
A credit score is a three-digit number that reveals how responsible you are when you borrow money. It considers your financial history and predicts how likely you are to pay back debt. The higher your credit score, the greater your chances of getting approved for a loan with a low rate and favorable terms. Your credit score is made up of these five factors:
- Payment history: Payment history shows whether or not you make on-time payments on your credit cards, mortgage, car loans, and other bills.
- Credit utilization: Credit utilization refers to how much of your available credit you actually use.
- Length of credit history: Length of credit history indicates how long each of your accounts have been open.
- New credit: New credit is how many new credit accounts you apply for.
- Credit mix: Credit mix refers to the different types of accounts you have open, like credit cards, mortgages, car loans, and student loans.
Hard vs. soft credit checks
Also known as hard pulls, hard credit checks usually occur when a lender checks your credit after you apply for a loan or other financial product. A hard credit check requires your permission and can temporarily lower your credit score by a few points.
Soft pulls or soft credit checks typically occur when an individual or company checks your credit as part of a background check. A credit card company might perform a soft pull to find out if you qualify for a certain card, for example. Since you’re not actually applying for credit in this case, soft credit inquiries don't affect your credit score.
Does checking my credit score hurt my credit?
When you check your credit score on your own, you’ll perform a soft credit check. So, doing this won’t have any negative impact on your credit. You can check your credit as much as you’d like without worrying about your credit score decreasing.
Do hard credit checks lower my credit?
Hard credit checks can lower your credit score by five points or less. They’ll have a greater impact if you don’t have a credit history or only a few credit accounts. If you have a long credit history, hard credit inquiries shouldn’t impact your credit too much.
Should I check my credit score?
Your credit score is a snapshot of your financial health, so paying attention to it can show you how you’re doing financially. It can tell you how much of your available credit you’re using so you can determine an appropriate level of debt. Checking your credit score may also inform you of any fraudulent activity and give you an idea of what types of loans or other financial products you might qualify for.
How to check your credit score
There are several ways you can check your credit score. Your credit card company, bank, credit union, or lender may give you free access to it. You can also purchase your credit score directly from a credit bureau, like Equifax, Experian, and TransUnion. Another option is to use a free credit scoring site or subscribe to a credit score monitoring service.
Ways to improve your credit score
Here are some ways you can increase your credit score:
Make consistent on-time payments
Do your best to pay your credit cards, mortgage, personal loans, student loans, and other bills on time, every time. Even one missed payment can take a toll on your credit score.
Maintain a low credit utilization ratio
A credit utilization ratio is how much credit you’re using compared to how much is available to you. Many financial experts recommend you keep your ratio under 30%.
Limit how many new accounts you apply for
Applying for too many accounts in a short period of time can lower your credit score. That’s why you should only apply for new credit when you absolutely need to.
Keep old accounts open
Since longer credit accounts can improve your credit, don’t close old accounts. Even if you don’t use them, consider keeping them open.