What Happens If I Check My Credit Score?

A credit score is a numerical representation of an individual’s creditworthiness, primarily indicating the likelihood of repaying borrowed money. It plays a significant role in various financial aspects, including obtaining loans, securing housing, and even some employment opportunities. Many individuals wonder about the consequences of checking this score, particularly if it might negatively impact their financial standing. Understanding how credit scores are calculated and the different ways they can be accessed helps clarify these concerns.

The Two Types of Credit Inquiries

When your credit information is accessed, it falls into one of two categories: a soft inquiry or a hard inquiry. These distinctions are based on the purpose of the credit check and who initiates it. The type of inquiry determines its potential impact on your credit score.

A soft inquiry occurs when your credit is checked for informational purposes or pre-approval processes. These checks are not tied to a formal application for new credit. Examples include when you check your own credit score through a personal finance app, when a potential lender pre-screens you for a credit offer, or when an employer reviews your credit as part of a job application process. Soft inquiries do not signal to other lenders that you are seeking new credit.

Conversely, a hard inquiry takes place when a lender formally reviews your credit history in response to an application for new credit. This occurs whenever you apply for a new credit card, a mortgage, an auto loan, or a personal loan. Hard inquiries indicate that you are actively seeking additional credit, which is a factor considered by credit scoring models.

How Checking Your Score Affects It

The impact on your credit score depends entirely on the type of inquiry made. Checking your own credit score, which results in a soft inquiry, does not negatively affect your score. This is because such checks are for your personal information and do not suggest an increased risk of new borrowing. You can review your own score as often as you wish without any adverse consequences to your credit standing.

Hard inquiries, however, cause a small, temporary dip in a credit score. A single hard inquiry results in a drop of about five points or less, according to FICO. This minor decrease is temporary, with the impact fading within a few months, though the inquiry may remain on your credit report for up to two years. Lenders view multiple hard inquiries in a short period as a potential sign that an individual might be taking on too much debt, which can slightly increase perceived risk. This temporary impact recovers quickly with responsible credit behavior, such as making timely payments.

Information You Discover

When you check your credit score, you gain access to valuable insights into your financial health. You will see the numerical score itself, accompanied by the specific scoring model used, such as FICO Score or VantageScore. This number provides a quick snapshot of your credit standing.

Beyond the score, most services provide details about the key factors influencing your score. These factors include your payment history, the amounts you owe (credit utilization), the length of your credit history, the types of credit you use, and recent credit applications. For instance, payment history is a significant component, reflecting whether bills are paid on time. Credit utilization indicates how much of your available credit you are using, with lower utilization generally being more favorable.

While checking a score is not identical to obtaining a full credit report, many platforms offer a summary or highlights from the underlying credit report. This summary includes information about open accounts, current balances, payment statuses, and any public records like bankruptcies. Reviewing this information allows you to understand the components of your score, identify potential inaccuracies, or detect signs of identity theft, which can be crucial for maintaining financial security.

Practical Steps for Checking Your Score

Accessing your credit score is straightforward, and several reliable methods are available. The official source for your free annual credit reports from each of the three major nationwide credit reporting companies—Equifax, Experian, and TransUnion—is AnnualCreditReport.com. While this site primarily provides your credit report, some versions of the report may also include a credit score. You are entitled to one free report from each bureau every 12 months.

Many financial institutions now offer free credit scores to their customers. Credit card companies and banks provide monthly access to your FICO Score or VantageScore as a complimentary service through their online banking portals or mobile apps. This is a convenient way to monitor your score regularly. Additionally, numerous reputable personal finance apps and websites provide free credit scores, accompanied by educational resources and tools to help you understand and improve your credit. Regular monitoring helps you stay informed about changes in your credit profile and quickly identify any unexpected activity.