Why Checking Your Credit Score Can Hurt Your Credit

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Why Checking Your Credit Score Can Hurt Your
Credit.
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Credit Score Basics

• While its tempting to checking your credit score
  once in a while, doing so too often can hurt your
  credit score in the long run. Some consumers
  check their credit score daily or multiple times
  per day however, the practice of checking your
  score too often can show lenders that you are
  desperate to learn your score and may also
  reflect that you are over-extending yourself
  financially. Its best to check your credit score
  once per month or after making significant
  financial changes, such as opening a new line of
  credit or applying for a loan.

The vast majority of consumer credit in America
is supplied by big banks and other huge financial
institutions. These companies have massive
databases called credit bureaus with information
on over 300 million Americans. By examining these
massive datasets, they determine an individuals
likelihood to repay a loan, which is how they
gauge their customers creditworthiness. FICO and
Vantage Score are two major competing credit
scoring models widely used by lenders today.
Generally speaking, a higher score means youre
considered a more reliable borrowerall else
being equal.
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What Happens When You Check Your Credit?

• The average American has a FICO score somewhere
  between 600 and 700, though scores can range from
  300 to 850 or more! In general, higher scores are
  better for individuals looking to take out loans
  because it makes them eligible for lower interest
  rates.

After you check your credit, it gets recorded on
your report as a hard inquiry. Like any other
information that appears on a credit report, hard
inquiries affect a consumers FICO score. Each
hard inquiry lowers a consumers FICO score by
one point however, multiple auto loan and
mortgage inquiries will not lower FICO scores
beyond five points per year. Additionally, some
issuers will exclude inquiries within 45 days of
each other from their calculations of FICO scores
because such inquiries may not be accurate
predictors of risk. Even without such exclusions,
multiple inquiries negatively impact consumers
scores more than just one inquiry.
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Protecting Credit While Checking Your Credit Score

• Checking your credit should only be done once
  every four months at most. The rest of the time
  should be spent monitoring accounts through
  online banking or other financial technology
  solutions. Monitoring accounts is far less
  damaging to credit scores than checking them
  frequentlyevery three months is recommended if
  possible.
• Consumers who want to improve their FICO score
  also need to pay attention to what kinds of
  accounts they have checked when calculating their
  score. They should avoid opening new lines of
  credit during times when they are planning on
  applying for loans to prevent lenders from
  assuming they are trying to inflate their
  creditworthiness artificially. All in all,
  checking your credit too often or at too many
  different places hurts your chances of getting
  future lines of credit approved, which means you
  could end up spending more money on interest
  payments over time.

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• Checking your credit score will not directly
  affect it. However, if you check it often, you
  could indirectly hurt your chances of getting a
  loan or line of credit in the future. The three
  major U.S. credit bureaus (Equifax, Experian, and
  TransUnion) track how often consumers check their
  scores on their websites. This metric is used to
  determine whether an individual should be charged
  for viewing their information, so its important
  to keep an eye on when you go online to see how
  lenders view you as a potential borrower. Not
  only does frequent checking indicate low-interest
  rateswhich may hinder your ability to obtain
  financingbut also lenders might interpret such
  behavior as indicative of an individuals debt
  problems or other financial issues that they
  believe could ultimately negatively impact their
  business.
• Additionally, multiple checks per month by
  individuals with bad credit histories may result
  in additional inquiries being placed on those
  accounts and thus potentially lower scores. Its
  best practice to avoid obsessively looking at any
  part of your credit history, including your
  score. Instead, review all three from time to
  time to ensure theyre accurate and consistent
  with what you know about yourself from other
  sources.

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Contact Us -

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• Phone - [phone]
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