Over the course of your financial life, your credit score will be checked often as banks and other lenders evaluate whether or not to lend you money or extend credit. Financial institutions prefer to lend to borrowers with good credit (typically meaning a credit score above 670). Finding out your score can be quick and easy, and it won't hurt your rating.
- Many credit card issuers and banks provide free credit scores to their customers.
- Personally checking your credit score won't affect it. Nor will checking your own credit report.
- However, when you apply for credit, the lender will make a so-called hard inquiry, which can lower your score a bit.
- A hard inquiry is when a lender requests your credit report with your permission.
- It's usually best not to make too many credit applications in a short period of time because that can have a negative effect on your credit score.
Can Checking Your Credit Score Hurt It?
The answer is basically no.
Personally looking up your current score or credit report won't cause any damage. That's considered a soft inquiry, which has no effect. Whether a soft inquiry is done by you or by a potential lender (for example, a credit card company looking for new customers), your credit score will be safe as long as the inquiry isn't the result of your applying for a loan or other credit.
However, when a lender checks your credit report as part of a credit application you have made, that's considered a hard inquiry. Hard inquiries will show up on your credit report and may shave a few points off your score—most likely less than five—according to FICO, the major credit-scoring company.
By law, you are entitled to a free credit report at least once every 12 months from each of the three major credit bureaus. You can get them at the official website, AnnualCreditReport.com. You can also get a free credit report within 60 days of receiving an adverse action notice, saying you've been turned down for credit. Credit reports are the basis of your credit score, but they do not include it.
Tools You Can Use to Check Your Credit Score
How do you find out what your credit score is? A variety of services and tools are available, so take your pick:
- See if your bank or credit card issuer already provides credit scores. Many banks and credit card issuers give their customers free access to their credit scores. Some also offer tools that will forecast how certain changes to your account, such as late payments or credit limit increases, could affect your score.
- Sign up for an account on a free credit score website. There are plenty of websites that offer free access to your credit score. Some also offer credit monitoring services for a fee. For basic credit score checks, these sites often don't require a paid subscription, though many will charge for more advanced features. Bear in mind that you probably have several credit scores based on different scoring systems, and the ones you can get for free may not be identical to the others.
Soft Inquiries vs. Hard Inquiries
As mentioned, soft inquiries have no effect on your credit score. Hard inquiries, also referred to as hard pulls, are another matter. They occur when a financial institution pulls your entire credit report, with your permission, to determine whether you're a good candidate as a borrower. This can result in a small reduction in your credit score for a few months, though it will hang around on your report for approximately two years.
Examples of Soft Inquiries
The following are examples of what constitutes a soft inquiry:
- Checking your own credit. This, as we've noted, has no effect.
- A current creditor checks your credit. If you have a credit card or loan, your creditor may want to keep tabs on your finances. Because this is not a new lender peeking into your financial history, it won't hurt your score.
- Your auto insurer looks at your credit file. The company that currently holds your car insurance policy may initiate a soft pull on your credit report in setting or adjusting your annual premiums. Since the mid-1990s, many insurers have used credit reports to determine a motorist's likely level of risk, stemming from a belief that better credit correlates with safer driving.
Examples of Hard Inquiries
These are some examples of hard inquiries that may lower your credit score temporarily:
- You apply for a new credit card or loan. When you fill out a credit card or loan application, you'll be giving the creditor permission to pull your full credit report.
- You request a credit line increase from an existing creditor. In this instance, the credit provider will pull a new credit report to decide whether or not to grant you that increase.
How Often Does a Credit Score Change?
Since a credit score is a living record of a person's financial history, it can change on a daily basis. Typically, your credit score will be updated as new payments, account balance changes, new credit inquiries, or fluctuations in your outstanding debt take place. Credit reports are generally updated monthly.
Where Are Credit Inquiries Reported?
Credit inquiries will be reflected in your credit reports at the three major credit bureaus: Equifax, Experian, and TransUnion. They keep track of your financial history and are where lenders go to see your file.
What Is a Good Credit Score?
Credit bureaus and credit-scoring companies use a number of different scoring systems, sometimes depending on the type of credit involved (auto loan vs. mortgage, for example). A FICO credit score of 670 to 739 is generally considered "good," with higher scores being either "very good" or "exceptional." The scores can range from 300 to 850. Anything below 580 is considered "poor."
The Bottom Line
Knowing your credit score will give you a good idea of where you stand with current and future lenders. Checking it and your three credit reports periodically will have no effect on your score and can usually be done free of charge.