Does a Credit Check Lower Your Credit Score?

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Credit Q&A:”Does a Credit Check Lower Your Credit Score?”

I get this question all the time, and like all things in the credit score realm, it depends.  Sigh…

There are a number of different reasons to run a credit check, and thus the confusion, but we’ll get to the bottom of it. I promise.

Checking Your Own Credit Will Not Lower Your Credit Score!

Let’s knock out the easy ones first.  If you’re simply checking your own credit via a free credit score website or via the FTC’s free credit report program, your credit score will not be affected in any way.  This means it won’t go up or down.

These consumer credit reports (and scores) allow you to see what’s up with your credit history, but pose no harm to you because you’re not actually seeking new credit, at least not right then and there.

Think about it; why would you be penalized just for checking your own credit report and/or score(s)?  That wouldn’t make any sense. If anything, you should be commended for keeping an attentive eye on your credit history.

Related to that, you have a right to order a free credit report every 12 months from each of the three major credit bureaus.

When you order one of these free credit reports, it actually breaks up your credit inquiries into two separate buckets.

Hard Pull vs. Soft Pull

You may have heard the term “hard pull” and “soft pull.”

A “hard pull” refers to credit inquiries that actually affect your credit score, those which are initiated by the consumer and involve new credit. Try to keep these to a minimum, and definitely avoid them before shopping for a home loan.

A “soft pull,” on the other hand, is innocuous, and includes credit reports you pull yourself, or those pulled by an employer or an insurance company. These are harmless and won’t do anything to hurt you or your credit.

In conclusion, you shouldn’t worry too much about the effect of credit inquiries. Things like paying bills on time and keeping your existing balances low are much more important, and impact your credit score to a much greater degree. As long as you practice moderation, you should enjoy a solid credit score.

Tip: Review the credit inquiries on your credit report to ensure you recognize them all. If you see anything that doesn’t look familiar, you could be the victim of identity theft. If you suspect anything, contact the creditor you don’t recognize for further information.

Inquiries Shared With Others (Hard)

These inquiries are the ones that you initiated, typically in order to get some kind of credit, such as a credit card, auto loan/lease, mortgage, cell phone, etc.  They appear on your credit report and are visible to other prospective creditors and employers if and when they pull your credit report.

Put simply, they’re visible because they affect your credit in one way or another. And creditors need to see them to make subsequent lending decisions.

Inquiries Shared Only With You (Soft)

The other section you’ll see is the inquiries that do not hurt your credit, and are visible for you only as a record of activities.

For example, if you sign up for Credit Karma or Credit Sesame, which are free credit score providers, inquiries will show up on your credit report each month but won’t count against you in any way. You may also see credit inquiries from insurance companies if you got a few quotes recently.  Again, these do not affect your credit score because they do not involve credit of any kind.

Any pre-approved offers you qualify will also be soft inquiries, meaning they don’t count against you.  And occasional check-ups from existing creditors also fall into this category, as do background checks from employers.

It should even say explicitly on the credit report that “the following inquiries do not affect your credit score.”  They’re just there to let you know that a company is actively pulling your records.

Other Considerations

Now suppose you already have a credit card open with a company and they want to keep tabs on you. If they do a credit check just to see how things are going in your life, it won’t lower your credit score. Why?  Because you didn’t initiate the request and you’re not actively looking for new credit.  They’re simply checking up on you.

The same is true of companies researching your credit profile and subsequently sending you so-called pre-approved or pre-screened offers; it won’t hurt your credit score.

In all these instances, you did nothing to prompt the credit check, so you won’t be penalized in any way.

Similarly, if you apply for a job and your potential employer orders a credit report, it won’t lower your credit score because no new credit is at stake. They simply want to check out your financial background, so again, it won’t affect your credit score.

These types of inquiries do NOT hurt your credit score:

  • Requests made by YOU for your credit report and/or credit scores
  • Promotional inquiries made by lenders and credit card issuers to send pre-approved offers
  • Credit checks initiated by insurance companies
  • Credit pulls from prospective employers to check your background
  • Existing account reviews (credit card issuers check up on us from time to time)

The only time your credit score could drop as a result of a credit check is when you apply for new credit.

Examples include applying for any type of loan, such as a mortgage, auto loan, auto lease, a new credit card, or an increased credit line with an existing card or loan.

These are the only instances when a credit check will lower your credit score, as new credit or inquiries for new credit pose new risks, regardless of how great of a borrower you’ve proven to be in the past.

In the eyes of creditors, consumers who are actively seeking new credit pose a greater risk of default.

Of course, the stronger your credit profile, the less impact these, dare I say, harmful credit checks will have on your credit score.

As a rule of thumb, the more hard credit inquiries you have in a short period of time, the more your score will drop, so exercise moderation.

How Long Do Inquiries Stay on Credit Reports?

A reader once asked me, “Do credit inquiries ever go away?” Although there seems to be much dispute about this, credit inquiries only remain on your credit report for two years, but FICO scores only factor in inquiries as part of their scoring methodology for the previous 12 months.

In other words, even if they are present on your credit report, they’re only meaningful from a credit-scoring perspective for a single year. The rest of the time they just serve as additional information to you and your creditors.

Additionally, Fair Isaac, the founder of the FICO score, has improved its scoring model to distinguish rate shopping versus a consumer attempting to open a large number of different accounts. The latter borrower would probably see their credit score drop because a series of new credit accounts tends to lead to greater credit risk.

But a consumer with multiple inquiries related to the same type of loan within a 14-45 day shopping period will generally see no adverse effect to their credit score, as only one inquiry should be counted against them.

In fact, auto, mortgage, and student loan inquiries that occur 30 days prior to scoring don’t affect your FICO score, and all such inquiries that occur within a 45-day window are treated as a single inquiry (this isn’t a mix and match deal though…)

For example, think of a person who shops with multiple lenders to obtain a home loan. FICO knows it can be a long process, and doesn’t want to discourage consumers from comparison shopping, so they won’t count all those inquiries against you separately.

How Credit Inquiries Can Hurt Your Credit Score

As alluded to above, a credit inquiry can lower your credit score, but the impact is generally rather inconsequential.

Typically, a single credit inquiry will take less than five points off your credit score, but this can range depending upon the type of inquiry and the overall makeup of your credit profile. If you have a limited credit history, one inquiry will have a greater impact than a consumer with a solid 10-year credit profile.

But a large number of different types of inquiries in a short time period can be a red flag for potential creditors, and could result in a noticeably lower credit score. And even if you do have a good credit score, a large number of inquires in a short time span could cause a creditor to decline your application for fear that you’re getting in over your head.

That said, don’t fret too much about pulling your own credit report every now and then as not all credit inquiries count against you. If you order a credit report online from any of those “free credit report” sites it won’t be factored into your score because it’s not an application for credit.

It’s simply a check-up, and doesn’t signal a greater credit risk for the consumer. Same goes for employee credit pulls and pre-approved credit offers. As a rule of thumb, if the credit pull doesn’t involve new credit or wasn’t initiated by you, it shouldn’t affect your credit score.

Author: Colin Robertson

Colin created this blog after spending several years in a job that required him to scour credit reports on a daily basis. His goal is to help individuals better understand their credit and get the most out of credit cards.

5 thoughts on “Does a Credit Check Lower Your Credit Score?”

  1. IT IS ABSOLUTELY RIDICULOUS FOR A CREDIT CHECK OF ANY KIND TO LOWER YOUR SCORE. THAT POLICY NEEDS TO CHANGE!!!!!!!!!!!!!!!

  2. Tonya,

    Unfortunately there’s a correlation between lots of applications for new credit and missed payments or default, so it won’t change.

  3. Corey,

    It’s a promotional credit score that doesn’t require an application for new credit so doesn’t ding your scores.

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