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This article was last updated Jun 11, 2020. Terms and conditions may have changed. For the most accurate information, please consult the issuer website.
When you log into your credit card or bank account, you may see the option to check your credit score. If you’ve ever hesitated to open that window out of fear it will have a negative impact on your score, there’s no need to worry.
Checking your own credit score doesn’t have the same impact as when a lender checks your score and credit reports when evaluating your creditworthiness when you apply for a new loan or credit card. The other good news is that it’s easier than ever before to check your credit score – for free.
- The difference between hard and soft credit inquiries.
- How much a hard inquiry will impact your credit score.
- Where to check your credit score for free.
- Why checking your credit score often is important.
The difference between hard and soft credit inquiries
Your credit reports reflect borrowing and repayment activity from credit card accounts and loans, as well as any accounts that are reported delinquent, such as medical bills and judgments. This information is then fed into an algorithm that makes up your credit score.
Credit inquiries are also included and are either classified as a “soft” or “hard” pull of your credit reports.
Soft inquiries do not cause any damage to your scores and can include:
- Checking your own credit score.
- Marketing inquiries by potential lenders seeking new customers.
- Background checks by potential employers.
- Insurance quotes.
Hard inquiries do impact your credit score and are typically generated in the following scenarios:
- Credit card applications.
- Auto, student, personal and mortgage loan applications.
- Signing up for new utility or cellphone service.
- Apartment or house leasing applications.
While both types of inquiries show up on your credit reports, only lenders can see the list of hard inquiries when evaluating you for a loan, credit card or other service, and only you can see both the hard and soft inquiries when you pull your credit reports yourself.
How much a hard inquiry will impact your credit score
The reason why hard inquiries knock points off your credit report is because potential lenders want to be able to evaluate your financial standing. If they see too many hard inquiries in a short amount of time, that may indicate you could be in financial distress.
A hard inquiry will stay on your credit report for two years, although its negative effect will lessen as months pass. After a year, your credit score will not factor in that inquiry into its formula, although it will still appear on your credit report.
Each hard inquiry generated by a lender will knock, on average, five to 10 points off your credit score, according to FICO. The lower your credit score, the more damage it could have compared to someone with a long credit history in good standing.
New credit accounts comprise 10% of your FICO Score, so while that’s not huge, if your score is teetering on the edge between fair and good, having too many hard inquiries won’t help.
There is a scenario where multiple hard inquiries are counted as one. When rate shopping for a mortgage, auto or student loan from several lenders to see which one will give you the best interest rate, FICO will lump all those together if those inquiries are all generated within a 30-day period (for older versions of the FICO Score) or 45 days (for lenders using newer versions of FICO Scores) as soon as you settle on one lender.
How to check your credit score for free
Since free credit scores are so widely available, you shouldn’t have to ever pay to see where you stand. For example, you can get your free credit score by just answering a few questions to confirm your identity at My LendingTree.
If you have a credit card or bank account through American Express, Bank of America, Barclays, Chase, Citibank, Discover, PNC Bank or Wells Fargo, to name a few, you should be able to access your credit score through their online portal. There is a list of financial institutions that belong to the FICO Score Open Access Program where you can check to see if your bank or credit union offers a free credit score service.
Credit card issuer Discover allows free access to your FICO Score online with Discover Credit Scorecard, even if you aren’t a Discover cardholder. Capital One also offers a free VantageScore 3.0 (a competitor with FICO with a similar scoring range of 300 to 850) through its CreditWise program that is open to all consumers.
One of three big credit bureaus, Experian, also provides free FICO Scores. Equifax and TransUnion, on the other hand, either enroll you into a free trial or require you sign up for a paid credit monitoring service, so unless you’re in need of credit monitoring, avoid those when looking for a free credit score.
Why checking your credit score often is important
Keeping a running tab on your credit score is key to good financial health since it plays such an important role in how much you’ll pay in interest charges on future loans and credit products. And your credit score could also affect future employment for certain types of jobs, as well as whether you will be approved for a home rental or a more affordable cellphone contract.
Plus, if you notice your credit score suddenly drops and you haven’t done anything wrong, like missing a payment, then that may provide a clue to an error in your credit report or even fraudulent activity. That’s why it’s also wise to check your credit report a couple times a year as well. You can view your credit reports from each of the big three credit bureaus (Equifax, Experian and TransUnion) for free once a year through annualcreditreport.com.
Most importantly, you want to ensure your credit score numbers are continually going up. Sure, they’ll fluctuate from time to time depending on a variety of factors, such as applying for a new credit card or loan, but making sure the overall trajectory is positive can motivate you to become more fiscally responsible, which is what future lenders want to see.