Is There a Point Reduction When You Check Your Credit?

Inquiries into your credit report could reduce credit score if the inquiries make it appear you are seeking more credit. The act of checking your credit never hurts your score, however, and it may help prevent identity theft and could enable you to detect negative or erroneous items before they do more damage. You can perform this check for free once a year, but you may have to pay to get a more detailed picture of how lender's view your report.

Theory

Some may be led to believe checking your own credit reduces your credit score, because an inquiry is noted on a credit history whenever the credit is checked, whether it affects your credit score or not. If you check your score frequently, especially through a third-party credit monitoring service, it could appear you need credit because of financial hardship or concern about current debts, even if the inquiry does not lower your score.

Reality

Checking your own credit counts as a "soft inquiry." Soft inquiries appear on your credit report when you pull the report yourself or a third-party checks your credit without your consent. It does not affect your credit score. When you apply for credit, the application generates a "hard inquiry," and that affects your credit score slightly. Soft inquiries only appear to the consumer when he pulls his credit report, so lenders never know how many times you check it.

Benefits

Checking your own credit report can be beneficial before shopping for a loan. You want to review the report for any errors, such as on-time payments reported as being late or the presence accounts you never opened. You also can check your credit to draft a plan to improve your score. If, for instance, you use too much of your credit limit, you may want to address that issue first.

Tip

The federal government requires the three major credit reporting agencies--Equifax, Experian and TransUnion--to provide each citizen with one free credit report each year. You should check your report with each agency, because they do not share information and your three credit reports may differ. The free credit report does not include your credit score. The major bureaus, however, usually provide a credit score if you try out one of their services.