Insider secret: Pulling your own credit report will not hurt your score. In fact, it might help your score.
Wait a minute, you might be thinking. I’ve heard that credit inquiries count for 10 percent of a person’s credit score!
This is true. Some credit inquiries do affect your credit score. If you apply for seven credit cards and a car loan all in the same week, the credit-reporting bureaus will quickly assume that you are preparing for a major shopping spree. Skeptical of your ability to repay all this debt, the credit-scoring bureaus will lower your score.
Most people assume, then, that they shouldn’t pull their own credit reports. They figure that doing so will cause their scores to drop.
But failing to pull your own credit report is one of the biggest credit score mistakes a person can make. You need to know your credit score so that you can make changes in your behavior that allow your score to increase to at least 720. And you need to review your credit report so that you can correct mistakes and nip identity theft in the bud.
The good news is that pulling your own credit report will not affect your credit score. Though ten percent of your credit score is based on credit inquiries, the credit-scoring bureaus make an important distinction between the two types of inquiries:
Hard inquiries are the only inquiries that affect your credit score. Hard inquiries are those made into your credit score by lenders for the purpose of deciding whether to approve loan applications. A hard inquiry will be posted to your credit report if you apply for:
- A credit card, or respond to a “pre-approved” credit card offer,
- A retail store card,
- A car loan or home loan (though all car loan inquiries within a 45-day period will be counted as just one), or
- Any other loan.
Soft inquiries are inquiries into your credit score for any other purpose. Though soft inquiries will appear on your credit report, they will not affect your credit score. Soft inquiries include inquiries:
- You make into your own score,
- A landlord makes for the purpose of determining whether to grant you a lease,
- An employer makes when deciding whether to hire you,
- A lender makes for the purpose of determining whether to send you a “pre-approved” credit card offer,
- An automobile insurance company makes to determine your insurance rate, and
- All other non-lender-related inquiries into your credit score.
So what are you waiting for? Pull your credit report and your credit score. Review your credit report for mistakes, look for evidence of identify theft, and then start learning how to how to build your credit score to 720.
Philip TIrone is the author of 7 Steps to a 720 Credit Score.