Part 1 – Checking Your Credit Score – Good or Bad?
No matter how much good and useful information is out there, the bad and incorrect stuff somehow sticks. “Experts” at the water cooler, or that friend who knows that one guy who knows that one girl who has a cousin with that one friend who works in credit, and they said you can just ignore that Tax Lien…
The point is, with so much misinformation out there it’s good to know the simple truth. So we’ve come up with some of the most common misconceptions about your credit report and your credit score.
First on our list is the myth that every time you check your credit score or pull your report, it brings your score down. The short answer is: it doesn’t. But what kind of a blog post would this be if we didn’t go into some fancy detail?
- Checking Your Score – Hard Inquiry vs. Soft Inquiry – One of the single biggest misconceptions about credit scores is that every time you check your score it costs you points. There are good reasons for believing this to be the case. After all, there are actually two different ways your score and credit can be checked. To settle the matter once and for all, we’ll begin by saying: This. Is. FALSE. There are some types of inquiries that can count against you, so we’re gong to explain those here.
- A Soft Inquiry – These inquiries refer to things like background checks when you apply for a job or when you check your own credit score. These do not cost you a single point off your credit score. It doesn’t many much sense to bring your score down for something you that can sometimes even happen without your permission. A Soft Inquiry might show up on your report but they will never count against your score.
- A Hard Inquiry – happens when a financial institution – such as an auto lender or a mortgage lender – pulls your credit to determine your credit worthiness in order to make a lending decision. In layman’s terms, when you go to buy a house or a car, the bank is going to check and see if they should lend you money by pulling your credit. This is a Hard Inquiry and can cost your score anywhere from five to ten points and will remain on your credit for up to two years.
Check your credit score on your own as often as you like, it won’t cost you anything. It’s actually highly recommended to check your report at least twice a hear But avoid shopping around trying to get someone to approve you for a large line of credit. Those will bring your score down.