By now, it’s fairly common knowledge that your credit report is a big deal. Many financial services companies check your credit score before approving you for credit cards, loans, and other products.

 

It’s only natural to want to see your credit report and credit score. However, some people believe checking your own credit report will somehow harm your credit score. So, is that true? No.

 

“When a person checks his or her credit report or credit score, it’s an inquiry for educational purposes,” says James Garvey, CEO of Self Lender, a company that helps consumers build and improve their credit. “This type of inquiry isn’t negative and won’t affect a person’s credit score.”

Soft vs. Hard Inquiry

Understanding the difference between a soft credit inquiry and a hard inquiry explains why not every look at your credit results in a credit score change.

 

  • Soft inquiry: Sometimes called a “soft pull,” it is used to gain information. You might look at your report and score to see where your credit stands, or a company might check whether you’d meet preliminary requirements for an offer. This type of look at your information won’t affect your credit score.
  • Hard inquiry: Also called “hard pulls,” these are done at your request. If you’re applying for credit or some other financial product and you grant permission to look at your credit report to confirm your eligibility, it will affect your credit score.

 

A hard inquiry usually doesn’t have a huge impact on your score, though. Typically, you won’t see your score drop more than five or 10 points. However, multiple inquiries add up if you apply for a lot of new credit within a short period of time.

“Multiple hard inquiries in a short time frame can be a red flag to a lender,” Garvey says.

 

“A person who applies for multiple financial products in a short period of time might be facing [financial] hardship.”

 

However, Garvey also points out that several inquiries for the same type of credit, like an auto loan or mortgage, often are lumped together as one. If it’s clear you’re shopping around for a lower rate for a single product, your score won’t be affected as greatly. But if you’re applying for lots of different types of products, that gets noticed.

What’s in your credit report?

Each of the major credit bureaus — Equifax, Experian, and TransUnion — receive information from creditors and others about how you handle your financial obligations.

“Your credit reports from the bureaus can help lenders make informed decisions,” says Sean Messier, a credit industry analyst with Credit Card Insider.

“Your reports should generally contain most of the same information, but certain lenders only report to certain bureaus, so there might be small differences.”

 

The information in your credit report goes toward creating a credit score that gives an overall sense of how you manage credit. Some of this information includes:

 

  • Current and past credit accounts.
  • Type of account (revolving or installment).
  • Late and missed payments.
  • Current debt.
  • Whether each account was paid as it was supposed to be.
  • Bankruptcy and foreclosure information.

 

Your credit report doesn’t just include information that affects your credit score, Messier points out. It also includes identifying information, such as your name, address, current employer, and Social Security number, although this doesn’t factor into your score.

 

Some credit reports also contain information about payments that aren’t related to credit, such as rent. However, credit-scoring models have been slow to include that information, although there’s some movement toward considering it.

How to Maintain a Good Credit Score

Responsible use of credit creates a good score. Making your payments on time, keeping your debt levels low compared with your available balances, and putting different types of credit in the mix helps you build a good credit score.

 

Messier warns that missed payments and charged-off accounts (debts that a creditor has given up trying to collect) can damage your score right away — and even affect your credit score for years to come.

 

He points out that focusing on payment history and debt utilization produces the best results, as they are the two most important factors that determine your score. However, the length of your credit history, along with the types of accounts you have, and how many hard inquiries have been made, also influence your score.

Bottom Line

Performing your own credit checks won’t affect how potential creditors view you, or how they make decisions about your ability to pay debt. But applying for credit can affect your credit score.

 

However, if you handle credit responsibly, by making payments on time and keeping debt levels low, you’re likely to achieve a good credit score — and be able to access the financial products you want.