The Myths and Truths About Checking Your Credit Score

It is a common misconception that checking your own credit score can negatively impact it. However, this is far from the truth. Let's delve into the details of how checking your credit score actually affects your credit report and score.

Understanding Credit Score Disclosure

There are two main categories of credit file disclosure: soft pull and hard pull. When you check your credit score on your own, it is considered a soft pull. This action is recorded, but it does not impact your credit score at all. On the other hand, a hard pull occurs when a creditor evaluates your credit information in response to an application for credit.

Why Checking Your Own Credit Score Doesn't Affect It

The reason checking your own credit score does not impact it is that you are not incurring or removing debt. It is a simple act of information retrieval, rather than an application or a decision to obtain credit. Therefore, it doesn't affect your credit and debt levels, which are the primary determinants of your credit score.

What Does Affect Your Credit Score?

Your credit score is influenced by various factors, including actions related to new credit applications, your payment history, and the utilization of your existing credit lines. These factors are considered over the last 7 to 10 years, with some exceptions like significant events such as bankruptcy.

Exceptions and Misconceptions

There are some exceptions and misconceptions about credit score inquiries. For instance, if a prospective lender checks your credit score as part of an application process, this is considered a hard pull and can lower your credit score slightly. However, this is not the case when you request a credit report yourself.

Another misconception is the idea that all inquiries affect your credit score. As mentioned, self-checks are typically soft pulls and do not have a significant impact on your credit score. This is exemplified by customers at Heisenberg Credit Union, where their FICO score remains the same unless they actively seek to check it.

Clarifying Hard Enquiries

Hard enquiries on the CIBIL score can be harmful. These occur when institutions, such as banks or credit card issuers, check your credit report in response to an application for a loan, credit card, or any other form of credit. However, soft enquiries, which are made by you when you check your own report, do not typically affect your CIBIL score.

Conclusion

In conclusion, checking your own credit score is a simple and useful act that does not impact your credit score in any significant way. It allows you to stay informed about your financial health without harming your credit rating. It is important to understand the distinction between soft and hard pulls to avoid unnecessary concerns and misinterpretations.