We're often told that checking our credit score is a good thing, but it’s not something that we all do. There are even some myths which say checking our credit score lowers it. The fact is, it’s incredibly useful to know what our credit score is, so we know if we have any work to do. It's also vital to ensure that the information recorded on our credit report is accurate and up to date. Spotting something that doesn't seem right means that it can be challenged, corrected, and even removed.
Applying for any form of credit will also see lenders checking our credit reports. They do this as part of their decision-making process, wanting to know if we are likely to repay what we borrow. Our past behaviours give lenders an insight into how we have managed debt before and allows them to mitigate risk.
With us being encouraged to check our own credit score and with lenders taking a peek too, you may be wondering, "does checking your credit score lower it?". The short answer is, it depends.
The first important thing to know is that you will not lower your own credit score by checking it yourself. Checking your credit score is a good thing, and you should be doing it without fear.
It's a good idea to check your credit score and report at least once a year. This way, you'll always know that the information held is correct and that no inaccuracies are causing you any harm. It is also useful to check your credit score and report before making any credit applications. You can see if you're in good shape or if you have any work to do before applying.
There are two types of searches that can take place on your credit report. These are known as soft searches and hard searches. The reason that checking your credit score doesn't lower it is because this is classed as a soft search.
Soft searches do not affect your credit score. In fact, the only person who can see that a soft search has taken place is you. Lenders can not see this information on your credit report. For you, the information is visible for between 12 and 24 months.
Examples of soft searches include:
Soft searches don't have an impact on your credit score as you are not actually applying for credit.
As we have seen, when you access your own credit report, this is classed as a soft search. Within a soft search, you have full access to everything that is held about you by the credit reference agencies.
A soft search carried out by an employer or landlord doesn't give them access to the same information. In fact, what they can see is quite restricted. The information they can glean is only that which is publicly available. It is used to confirm your identity and show any court information such as County Court Judgements (CCJs) and bankruptcy. They are unable to see any of your credit commitments.
A lender carrying out a soft search to pre-approve you for any credit has access to more information than an employer or landlord, but there is still no footprint left on your file. No one other than you and the lender can see that the check has been carried out.
If you are concerned that checking your credit score can lower it, it is hard searches that you need to be aware of. These searches only take place if you are actually applying for credit, be that a loan, a mortgage, credit card, or anything else that sees you entering into a credit agreement.
This hard search will include all the information in a soft search, but will also show your credit history. Lenders are able to see the credit you have available, the credit you have used, and all your repayments. All of this information allows them to assess if you are a responsible borrower and if you are likely to honour your agreement.
Unlike soft searches, hard searches are visible on your credit report. That means that if you make an application with a lender today, and then another one next week, the second lender will see that you have already applied for credit very recently. They can not see if you were rejected for this first application. However, lots of applications in a short space of time may set alarm bells ringing; the suggestion being that you either keep getting rejected or you are perhaps in financial difficulty.
The footprint left by hard searches will lower your credit score and is visible on your credit report for around 6 months. An excessive amount of these searches will lower your score more, and make it harder to recover. The key here is to only apply for credit when you need to and space your applications apart. A lower credit score could see you being rejected when you apply or being charged a higher rate of interest.
As we have seen, soft searches are only visible to you and you can also see details of any hard searches that have been carried out. There are numerous ways to access your credit report for free and once you have this you will see details of who has carried out any searches. Certain apps will even give you an alert when checks have been carried out on your credit report.
Hopefully, having asked 'does checking your credit score lower it?', you can now see that our original answer, in that it depends, is entirely accurate. Understanding the difference between soft and hard searches means that you now know the full impact of any searches that may be carried out for any reason.