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Anytime your credit is checked, an inquiry is noted on your credit report. Depending on who is checking your credit and why it's being checked, this inquiry will be classified as either a soft inquiry or hard inquiry. Soft inquiries don't affect your credit scores, but hard inquiries can.
Checking your own credit score is considered a soft inquiry and won't affect your credit. There are other types of soft inquiries that also don't affect your credit score, and several types of hard inquiries that might.
Here's what you need to know about soft and hard inquiries and why checking your credit score regularly is a good idea.
What Is a Soft Inquiry?
A soft inquiry, sometimes referred to as a soft credit check, can occur for a few reasons, including:
- When you check your own credit score
- When an employer or landlord runs a credit check with your permission
- When a lender runs a credit check to preapprove or prequalify you for an offer
Soft inquiries don't have an impact on your credit score because you're not officially applying for credit. So when you fill out a form to get prequalified for a mortgage, student loan, personal loan or credit card, there are no strings attached.
Once you take the next step and apply, however, the lender will make a hard inquiry, which will show up on your credit report for others to see and can temporarily lower your credit score.
What Can Lower Your Credit Score?
While checking your own credit score won't change it, there are plenty of other things that can affect your credit score negatively. Here's a quick breakdown of each factor that influences your FICO® Score* :
- Payment history: As long as you make your debt payments on time every month, your payment history, which is the most influential factor in your FICO® Score, will be in good shape. But if one of your payments is 30 days late or more, your credit score can go down. The longer your account is delinquent, the more it can hurt your score. Defaulting on the account can cause severe damage.
- Amounts owed: Your total debt burden is a factor here, but your credit utilization ratio is more important. Your utilization ratio shows how much of your credit card limits you're using at any given time. If you have a $500 balance on a card with a $1,000 limit, for example, your utilization rate is 50%. A utilization rate above 30% will start to hurt your scores, and the lower your rate, the better. Those with the best credit scores tend to have a utilization rate in the low single digits.
- Length of credit history: A longer credit history is better for your credit scores. This factor also includes another calculation called the average age of accounts. So even if you've been using credit for, say, 10 years, the average age of your accounts could be much lower, especially if you've recently opened several new accounts. To avoid lowering your average, try to avoid taking on new credit too often.
- Credit mix: The more types of credit you have—credit cards, personal loans, student loans, auto loans and mortgage loans—the better it can be for your credit. While having just one or two won't necessarily lower your credit score, it could limit your credit potential.
- New credit: Virtually every time you apply for credit, the lender runs a hard inquiry on your credit report. According to FICO, each new hard inquiry can lower your credit score by as much as five points. If you have multiple hard inquiries in a short period, though, it could have a compounding effect and lower your score even more.
Because there are so many variables that go into calculating your credit score, it's impossible to determine exactly how much damage a negative item may cause to your score. But if you notice your credit score drop and are wondering why, look at these areas to find the likely reason.
How Often Can You Check Your Credit Score?
You can check your credit score as often as you want without hurting your credit, and it's a good idea to do so regularly. At the very minimum, it's a good idea to check before applying for credit, whether it's a home loan, auto loan, credit card or something else.
When you do this, you can help make sure there aren't any problems that could make it difficult to get approved for a new loan or credit account. By checking at least a few months in advance, it can also give you time to address anything that could be hurting your credit score.
It's also a good idea to check your credit report at least once a year. While your credit score is a numerical snapshot of your overall credit health, your credit report provides the actual information used to calculate your score.
As you check your credit report, look out for anything you don't recognize. If you find something odd, contact the lender to make sure it's legitimate. Sometimes, a lender may operate under a different name and report a name you're not familiar with to the credit bureaus; if you're applying for a car loan, the dealership may submit a credit application to multiple lenders.
If you find information you believe is inaccurate or even fraudulent, report it to the credit bureaus.
You can get a free credit report from each of the three credit bureaus every 12 months through AnnualCreditReport.com. You can also get a free copy of your Experian credit report online every 30 days.
How to Check Your Credit Score
Historically, it's been difficult to get access to your credit score for free. But it's gotten much easier in the past few years.
For example, many financial institutions offer free FICO® Score or VantageScore access to their customers for free as a benefit. If you don't have an account with this perk, you can check your FICO® Score through Experian for free. A handful of other services offer this benefit as well.
Keep in mind that most lenders use your FICO® Score in credit decisions. So if you're looking at a different credit score, it likely isn't the one lenders will see when they do a hard credit check. Even with a FICO® Score, different lenders may use different versions of the score, such as an industry-specific version for certain types of loans. But you'll still have a good idea of where your credit stands.
Tips for Improving Your Credit
Checking your credit score regularly is essential if you're working on building or rebuilding your credit history. As you look for opportunities to improve your credit, here are some tips to help you get started:
- Get caught up on overdue payments, if applicable, and pay all of your debts on time every month going forward.
- Keep your credit card balances low—remember, the key is to keep your utilization rate below 30%, but the lower, the better. If you have high balances, focus on paying them down as quickly as possible.
- Consider asking a family member to add you as an authorized user on their credit card account. Before they submit the request, however, make sure the account has a positive history that can help improve your credit score.
- Avoid applying for new credit unless you need it.
- Get credit for paying your utility and phone bills—these payments typically don't get reported to the credit bureaus, but with Experian Boost™† , you can allow Experian to connect your bank accounts and use the data to identify utility and phone payments. Once you verify the accounts, they can be added to your Experian credit file and may help boost your credit score.
As you use these tips and other good credit practices, you'll be well on your way to a better credit score.