Smart borrowers know that some credit checks affect their credit score by a few points and can become a huge problem. If your bank provided you with a FICO score and credit check, there is a good chance this hurts your credit history. The circumstances surrounding the credit check and why it was pulled determine its true effect.
Did You Apply for Credit?
Only applications for a loan or a creditable service, such as rent or utilities, result in a hard inquiry. The lender may have shown you your FICO scoring during the application process for a loan, such as a mortgage, as a courtesy, but this still hurts your score. Some banks perform credit checks on accounts or for certain features, such as overdraft protection. This still negatively affects your credit.
Free Credit Check
Banks sometimes offer free FICO scores and credit checks to customers as a perk to keep them around. These are a soft check and do not hurt your score, because the major credit bureaus report them as a personal inquiry. The credit bureaus list personal checks on your report, but only to keep you informed of activity on your profile.
Account Review
Lenders review accounts from time to time to make sure a person's credit score has not dropped, noted by an "AR" in the credit inquiry section of your credit report. These do not affect your credit score, even if the bank shows you the score, but the lender might lower your limit if he sees a significant drop in your financial situation. On the other hand, he might offer more credit if you improve your FICO score.
Tip
Ask the lender how a credit check will show up on your credit history before he shows you a score. As long as the check counts as a soft inquiry, it won't affect your history and saves you money. The credit bureaus almost always charge consumers to see their FICO score calculation --- you only receive one free credit report each year from all three bureaus --- because federal law does not require free credit score calculations.
0 comments:
Post a Comment