Does Checking Your Own Credit Hurt Your FICO Score?
July 24, 2020
The importance of credit monitoring can’t be understated; the more you know about your credit report, how it changes and when can make a great deal of difference when you are ready to commit to a home loan.
Do you know what your credit reports say about your credit history? Your credit activity including the most recent events can sometimes make or break a credit application. The reason for credit monitoring has a lot to do with protecting your identity from fraudsters and thieves, but many people have never even seen a credit report, let alone understand what is in them.
Don’t feel bad if that describes you; many people have never reviewed their credit or monitored it. But if you are in the market for a home these issues suddenly become very important. The best thing to do is not to fret about your past ignorance of the power of the credit report--start reviewing your credit and monitoring it now and you’ll be in a much better position for loan approval going forward.
If you are new to this, you may wonder about the effects of checking your credit report. One common complaint about checking credit has to do with a misunderstanding of the credit review process; some people think that ANY credit inquiry can hurt your FICO score. But when you look at a credit monitoring company’s website you will often see plenty of disclaimers urging consumers:
“You can’t hurt your FICO score if you check your own credit." Is this true? Or is this just marketing hype?
The statement above IS TRUE. You can’t hurt your own credit by requesting a copy of your credit report or by credit monitoring. These “credit pulls” are “soft inquiries” that don’t affect your scores.
A hard inquiry, on the other hand, DOES affect your FICO score. When does a hard inquiry happen? Any time you apply for credit such as for a store credit card, auto loan, and yes, mortgage loans. But when you start credit monitoring you are making soft inquiries and the result is not the same--a lower FICO score doesn’t happen when the consumer investigates their own report.
But don’t take OUR word for it; what follows is from the official site of Experian, one of the big-three credit reporting agencies. This describes what is considered a soft credit inquiry:
“A soft inquiry, sometimes referred to as a soft credit check, can occur for a few reasons, including:
As you can see, not only is there no penalty for pulling your own credit, but also no penalty for having a mortgage lender do a pre-approval on you when getting ready to buy a home.
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Do you know what your credit reports say about your credit history? Your credit activity including the most recent events can sometimes make or break a credit application. The reason for credit monitoring has a lot to do with protecting your identity from fraudsters and thieves, but many people have never even seen a credit report, let alone understand what is in them.
Don’t feel bad if that describes you; many people have never reviewed their credit or monitored it. But if you are in the market for a home these issues suddenly become very important. The best thing to do is not to fret about your past ignorance of the power of the credit report--start reviewing your credit and monitoring it now and you’ll be in a much better position for loan approval going forward.
If you are new to this, you may wonder about the effects of checking your credit report. One common complaint about checking credit has to do with a misunderstanding of the credit review process; some people think that ANY credit inquiry can hurt your FICO score. But when you look at a credit monitoring company’s website you will often see plenty of disclaimers urging consumers:
“You can’t hurt your FICO score if you check your own credit." Is this true? Or is this just marketing hype?
The statement above IS TRUE. You can’t hurt your own credit by requesting a copy of your credit report or by credit monitoring. These “credit pulls” are “soft inquiries” that don’t affect your scores.
A hard inquiry, on the other hand, DOES affect your FICO score. When does a hard inquiry happen? Any time you apply for credit such as for a store credit card, auto loan, and yes, mortgage loans. But when you start credit monitoring you are making soft inquiries and the result is not the same--a lower FICO score doesn’t happen when the consumer investigates their own report.
But don’t take OUR word for it; what follows is from the official site of Experian, one of the big-three credit reporting agencies. This describes what is considered a soft credit inquiry:
“A soft inquiry, sometimes referred to as a soft credit check, can occur for a few reasons, including:
- When you check your own credit score
- When an employer or landlord runs a credit check with your permission
- When a lender runs a credit check to preapprove or prequalify you for an offer”
As you can see, not only is there no penalty for pulling your own credit, but also no penalty for having a mortgage lender do a pre-approval on you when getting ready to buy a home.
------------------------------
RELATED VIDEOS:
What You Need to Know About the Appraisal Fee
The Appraisal is an Important Requirement
Build Your Dream Home With a One-Time Close Loan
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