Do Free Credit Reports Hurt Your Record?

Even some people who work in the lending industry mistakenly believe that obtaining a free credit report hurts a person's credit score. This stems from the fact that certain types of inquiries will damage your score. Whether you receive a free report or pay for one, checking your score won't hurt; only applying for a loan can.

Misconception

Receiving a free credit report through AnnualCreditReport does not hurt your score because personal credit checks are considered a "soft inquiry," according to the BCS Alliance. Soft inquiries do not count against you, because they are initiated for a reason other than a need for credit. On the flip side, "hard inquiries" hurt your score and occur when you apply for a loan or a creditable account, such as a utility.

Benefits

Pulling your report may not benefit your FICO score calculation, but it does make you a more responsible borrower. Just the act of looking at your report is associated with higher scores and better financial literacy, according to the Consumer Federation of America. Without checking your score, you may not know of accounts that are in default or errors on your report, such as a collections account belonging to someone else.

Considerations

Lenders cannot see how many times you pull your report or know the number of other soft inquiries. Therefore, you do not have to worry that checking your report may make you appear concerned about your credit. Should you apply for credit or have a hard inquiry, this likely has almost no noticeable effect on your credit; a single inquiry counts for no more than five points. Only a lot of inquiries will start to affect your score.

Tip

Credit monitoring services do not hurt your credit score, even if your report is pulled by a third party. When you pull your report through a credit monitoring service, your action still shows up as a personal inquiry, according to Experian. Do not just assume, however, that a check counts as a soft pull. Ask the creditor or service provider how an inquiry shows up on your report.