Every time you check credit score, an inquiry is generated on your credit report. Soft inquiries will not affect your credit scores, but hard inquiries can reduce your score. Soft inquiries occur when you or your employer check your credit score. These inquiries do not harm your score because you are not applying for a loan. Hard inquiries occur when your lender checks your score in order to determine your credibility. This inquiry will show up on your report and can temporarily reduce your credit score.
Factors that Influence Your Credit ScoreChecking your score will not affect it. However, there are various factors that impact your credit score. Here is the quick overview of each factor that has an impact on your credit score (FICO score).
● Payment History: Your payment history accounts for 30% of your FICO score. It reflects whether you have repaid your loan amount consistently within the given time frame. If the payment is late by more than 30 days, your credit score will reduce. Moreover, if you default on any of your loans, it will have a severe effect on your score.
● Amounts owed: It accounts for 25% of your FICO score and represents how you utilize your credit also known as Credit Utilization Ratio (CUR). If you spend frequently using your credit, it can seem as a reckless financial behavior. Therefore, maintain your credit utilization ratio below 30% of your income.
● Number of Credit Inquiries: It accounts for 20% of your FICO score and every time you apply for new credit, lenders check your credit score creating a hard inquiry. Therefore, multiple hard inquiries will ultimately lower your credit score.
● Length of Credit History: If you have a long consistent credit history, your credit score will also increase. Hence, maintain your old credit accounts open even if you do not use them any longer.
● Credit mix: Borrowing and managing different credit such as home loan, education loan, car loan, etc will increase your score significantly.
How Frequently Can You Check Your Score?● You can check your credit score as many times as you want. Moreover, it is good to check your score often to have a track of your history.
● You can also check months in advance before applying for a personal loan so that you will have time to fix any issues.
● It is also important to review your credit report once a year regularly.
● You can check your credit score using Buddy Score to get an instant report showing your credit health.
EndNoteThus, checking your credit score often will not harm it unless a hard inquiry is initiated by the lender. Multiple hard inquiries can drastically affect your credit score which will be reflected in your report. Therefore, it is essential to check your report regularly to get potential errors rectified.