Do you want to check your credit score but are afraid to do so, as it may impact your credit score negatively? Do not worry; checking your credit score will not lower it. Find out why instead of avoiding accessing your credit report, it is advisable to access them regularly. Let’s first understand what hard and soft inquiries are, made by lending institutions.
What Are Hard And Soft Inquiries?
Your credit report features several things like repayment history, credit utilization, credit mix, and credit inquiries. So, what is a credit inquiry? When you apply for a loan, be it an auto or instant Personal Loan, the prospective lender reviews your credit report to assess your creditworthiness. This is a hard inquiry; a record is made in your credit report.
If you apply for more than one loan in a short span that is not for comparing rates, the credit report includes each inquiry by the financial institution, which lowers the score.
If you merely check your score, it is known as a soft inquiry; if a financial institution asks for it is known as a hard inquiry.
While hard inquiries do impact the overall rating, if there are multiple hard inquiries because you are comparing rates before making a big purchase, all these are treated as one hard inquiry. Inquiries made within 14 to 45 days are considered as one. This rule, however, does not apply to credit cards.
When you decide to check your credit score by yourself, it is known as a soft inquiry, which does not negatively impact your credit score. These inquiries are not made visible to potential lenders who access your report.
How Frequently Should You Check Credit Score?
You can get a credit report free of cost once a year from any one of the credit rating agencies. Meanwhile, you can make it a habit to check your credit report every quarter or at least two times a year.
Why Should You Check Your Credit Score?
The above discussion focuses on why checking your score does not hurt your credit rating. Apart from that, there are some benefits also for checking your score regularly:
Check The Accuracy Of Your Report
When you access your credit report, you can check it in detail to see if there are any errors and if the information recorded is correct.
If you spot errors like inaccurate loan details or wrong name or address, you should inform the credit bureau immediately to get them rectified.
Prevent Frauds
There are many instances of identity theft where unscrupulous elements use documents and details of others to take loans or credit cards.
By going through your report, you can check if any loans or cards that do not belong to you feature in it. This can help to detect frauds, if any, at the earliest and prevent further misuse.
Helps You Assess Your Credit Health
Your actions impact your overall credit health. If your score is low, you can assess why it is low. Missed payments, overuse of credit cards, or sometimes errors can result in a low score. You can find out the cause for the low score and work on it to improve it if required.
No Delay In Loan Processing
When you apply for any loan, the lending institution seeks your credit report to assess if you are creditworthy or not. A low credit score will result in your loan application rejection.
Usually, lending institutions ask for a credit score of 700 and above to consider a loan application, but at Clix Capital , you can get an instant personal loan on a credit score of 630.
So, checking your credit report at regular intervals is a good way to help you maintain a good score and secure your information.
The credit score reflects your financial health and creditworthiness, and it is a useful tool that can help you stay credit healthy and aids in financial planning. Soft inquiries do not lower your score, while hard inquiries do.
Also, keep checking your credit report from time to time and enjoy various advantages. You can go to the Clix Capital website and check your credit score for free.
Author Bio
Amaira Sharma
Amaira Sharma is a finance expert and former business growth strategist who has more than 8+ years of experience in the industry, now she helps others to get better financial stability and standards. She loves to write useful tips on personal finance and businesses.