by Throughout your financial journey, banks and other lenders will frequently check your credit score. They do this to decide if they should give you money or let you borrow it. These financial institutions like to lend money to people who have good credit. That usually means having a credit score above 670, which is like getting a high grade. So, if you want to borrow money in the future, it’s important to keep your credit score in good shape. That way, banks, and lenders will be more likely to trust you with their money. Checking your score can be quick and easy, and it won’t hurt your rating.
Soft inquiries vs. Hard inquiries
Checking out your own credit score or credit report won’t cause any harm. It’s called a soft inquiry, and it doesn’t affect your score at all. Whether you’re the one doing the inquiry or a potential lender (like a credit card company looking for new customers) does it, your credit score stays safe and sound, as long as you’re not applying for a loan or any other credit.
But here’s the deal: when a lender checks your credit report because you applied for credit, that’s called a hard inquiry. These ones leave a mark on your credit report, and they might lower your score a tad. But don’t stress! It’s usually just a small drop, most likely less than five points, according to the folks at FICO, the big credit-scoring company. So, as long as you’re not applying for credit too often, your credit score will be A-OK.
Options for checking your credit score
There are a variety of tools and resources that you can use to check your credit score:
- Your bank or credit card issuer may already provide credit scores. Many banks and credit card issuers provide their customers free access to check their credit scores. Others may also offer tools that provide forecasting features on certain changes to your account, such as late payments or credit limit increases, that could affect your score.
- Sign up for an account on a free credit score website. Many websites provide complimentary access to your credit score, while some may offer additional credit monitoring services at a cost. Typically, these sites allow you to check your basic credit score without requiring a paid subscription. However, advanced features often come with a fee. Keep in mind that various scoring systems generate multiple credit scores, and the free scores you obtain may not necessarily match the others precisely.
Do credit scores change often?
Yes, a credit score has the potential to change daily. Updates to your credit score usually occur when there are new payments, changes in account balances, credit inquiries, or fluctuations in outstanding debt. Credit reports, on the other hand, are typically updated on a monthly basis.
Who tracks the credit inquiries?
Credit inquiries will be reflected in your credit reports at the three major credit bureaus: Equifax, Experian, and TransUnion. They keep track of your financial history and are where lenders go to see your file.
What is a good credit score?
Credit bureaus and credit-scoring companies use various scoring systems, often tailored to the specific type of credit being assessed (such as auto loans or mortgages). A credit score ranging from 670 to 739 on the FICO scale is generally regarded as “good,” while higher scores are categorized as either “very good” or “exceptional.” These scores span a range of 300 to 850, with anything below 580 considered as “poor.”
Conclusion
Being aware of your credit score provides valuable insight into your standing with present and prospective lenders. Regularly monitoring both your credit score and the three credit reports will not impact your score and is often available free of charge.
