How do you know when checking your credit will hurt or score?
When you check your credit yourself online your credit score will not decrease.
This is because checking your own credit is a soft credit inquiry.
In this article you will learn the difference in a soft and hard inquiry. There are a few websites and apps available where you can get your credit score and report completely free.
When your credit report is pulled by a lender, it will negatively affect your credit score. That’s because it’s a hard inquiry. A hard inquiry is when you authorize a lender or credit issuing company to check your credit. However, when you check your credit score online it’s considered a soft inquiry and does not hurt your credit score.
What is a soft inquiry?
A soft inquiry is any time your credit is checked with or without your authorization by a company that you are not applying for a loan or credit with. For instance, when getting a car insurance quote, or signing up with a new wireless carrier. These are times that a company will perform a soft inquiry on your credit to check your credit worthiness.
When companies make soft credit checks
Companies make soft credit checks when they are doing a very basic check to see if you’re credit worthy or not. Typically this is the case when getting an auto insurance quote, receiving a pre-approved credit card offer, even employers sometimes do a soft credit check. When checking your own credit score on websites like Credit Karma and Credit Sesame that is also a soft credit pull and does not impact your score.
- Checking your credit score online
- Getting a new phone carrier
- Auto insurance quotes
- Employer background checks
- Pre-Approved credit and loan offers
Why does a hard inquiry hurt my credit score?
Hard inquiries happen when you apply for a loan or credit with a lender. Too many inquires show that you are desperate for cash, or are having difficulties getting approved. If you have a short credit history without much payment history, hard inquiries will impact your credit score more than someone with established credit history. A single hard inquiry can lower your credit score by no more than 5 points.
- Car lease or loan application
- Applying for a student loan
- Personal loan applications
- Business loan applications
- Home loans
- Applying for credit cards
How to know if a company that’s checking your credit is doing a hard or soft credit pull
Usually a company will only make a hard inquiry on your credit report if you’re trying to borrow money or get credit. A company cannot make a hard inquiry on your report without your authorization. Many times you won’t even know that a company does check your credit. Soft credit checks aren’t listed on your credit report and some companies with make a soft inquiry without your knowledge. These types of soft inquiries have absolutely no effect on your credit score however.
When a company asks you for personal information such as your social security number and birth date. Ask them if they will be checking your credit. If so, make sure it’s a soft credit pull so it will not negatively affect your credit score.
Checking your credit score will not have any impact on your credit score. This is a common misconception many people have. When checking your credit score it’s considered a soft credit check. A soft inquiry will not lower your credit score. If you want to check your credit report, Credit Karma and Credit Sesame are two great websites that let you view your report and scores completely free.
Randall has over 15 years of experience in the mortgage and credit industries. He spends a chunk of time helping consumers understand their credit, advise them on how to increase their credit, and lending his mortgage expertise to help them find the right type of loan. Randall lives in Dallas, Texas with his two sons.