credit report

Does Checking Your Credit Score Lower It?

Credit scores are all the rage these days.

It seems like it’s impossible to avoid seeing an advertisement for a “free credit score,” or hearing that silly band talk about how they couldn’t get a job/loan/girlfriend because their credit score was low.

So we know the advertising is working, but these ads do little to educate those who might be interested in obtaining their credit score(s).

That’s because one of the greatest fears associated with viewing your credit score is the risk that your score will fall if you do so.

So let’s debunk the myths once and for all.

There are two types of credit inquiries, including soft credit inquiries and hard credit inquiries.

Soft Credit Inquiries

A soft inquiry, also known as a “soft pull,” is a credit report/credit score that doesn’t adversely affect your credit score in anyway.

Essentially, these credit inquiries don’t involve you applying for credit. A soft inquiry may be triggered when you’re pre-approved for something, or if an employer wants to check up on your credit history.

Another very common credit inquiry is when you order a credit score from one of the credit reporting agencies or another company.

In all these situations, your credit score is not affected in any way.

Hard Credit Inquiries

Conversely, a hard credit inquiry, or “hard pull,” is an application for credit that does have the ability to affect your credit score.

This includes anytime you apply for a credit card, an auto loan/lease, mortgage, checking account, cell phone, etc, etc.

In short, your credit score could fall because these situations indicate that you are applying for new credit.

Why would a credit check lower my credit score?

The credit score creators, such as those behind the almighty Fico score and VantageScore, discovered that opening new credit accounts or multiple accounts in a short period of time represents greater credit risk.

In short, a greater need for credit is highly correlated to default.

But even one hard credit inquiry will only lower the average credit score by five points or so, making it a pretty insignificant event in the grand scheme of things.

Tip: Don’t apply for new credit while shopping for a mortgage or another major loan, as those five points could bump up your interest rate or result in your application being declined.