Does Checking Your Credit Score Lower It? A Deep Dive into Credit Inquiries and Credit Scores

Ever wondered if checking your credit score would actually lower it? The answer is a resounding no! In fact, regularly checking your credit score is a smart financial move that can help you stay on top of your financial health and catch any potential errors or fraudulent activity.

Here’s why checking your credit score doesn’t hurt:

• Soft Inquiries vs. Hard Inquiries: There are two types of credit inquiries: soft inquiries and hard inquiries. Soft inquiries, like the ones used by CreditWise and other credit monitoring services do not affect your credit score. Hard inquiries on the other hand, are initiated by lenders when you apply for new credit, such as a loan or credit card. While multiple hard inquiries in a short period can slightly lower your score, soft inquiries have no impact.

• Benefits of Monitoring Your Credit: Regularly checking your credit score with CreditWise or other services offers several benefits:

  • Catch Errors: You can identify and dispute any errors on your credit reports, such as incorrect account information or fraudulent activity.
  • Monitor Fraud: You can keep an eye on your credit for any suspicious activity that might indicate identity theft.
  • Improve Your Credit Score: By understanding your credit score and the factors that affect it, you can take steps to improve your score over time.

How to Check Your Credit Score Without Hurting It:

• Use CreditWise: CreditWise from Capital One is a free credit monitoring service that provides your VantageScore® 3.0 credit score and monitors credit reports from TransUnion® and Experian®, two of the three major credit bureaus. It’s a great way to keep track of your credit without any impact on your score.
• Get Free Credit Reports: You can get a free copy of your credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) by visiting AnnualCreditReport.com.

Understanding Credit Scores and How They Work:

• Multiple Credit Scores: It’s important to remember that you have multiple credit scores, as different credit-scoring companies and models exist. FICO® and VantageScore are two of the most well-known credit-scoring companies. Your credit scores can also fluctuate depending on when they are calculated.

• Factors Affecting Your Credit Score: Several factors contribute to your credit score, including:

  • Payment History: This is the most significant factor, accounting for 35% of your score. It reflects whether you pay your bills on time.
  • Credit Utilization Ratio: This factor, accounting for 30% of your score, measures the amount of credit you are using compared to your available credit. Experts recommend keeping this ratio below 30%.
  • Credit History: This factor, accounting for 15% of your score, considers the length of your credit history and how long you’ve had your accounts open.
  • New Credit: This factor, accounting for 10% of your score, looks at how many new credit accounts you’ve opened recently. Applying for too much credit in a short period can negatively impact your score.
  • Credit Mix: This factor, accounting for 10% of your score, considers the diversity of your credit accounts, such as mortgages, credit cards, and installment loans.

Tips to Improve Your Credit Score:

• Monitor Your Credit Regularly: Use CreditWise or other services to stay on top of your credit score and identify any potential issues.
• Pay Your Bills on Time: This is the most important factor in improving your credit score. Set up reminders or automatic payments to ensure timely payments.
• Keep Your Credit Utilization Ratio Low: Aim to keep your credit utilization ratio below 30% by paying down your balances or increasing your credit limits.
• Consider a Secured Credit Card: If you have limited credit history or have struggled with credit in the past, a secured credit card can help you build or rebuild your credit.
• Only Apply for the Credit You Need: Avoid applying for multiple credit cards or loans in a short period, as this can lead to multiple hard inquiries and potentially lower your score.

Remember, checking your credit score with CreditWise or other services that use soft inquiries is a safe and beneficial practice. It allows you to monitor your credit health, identify potential issues, and take steps to improve your score over time.