Will I be charged a credit interest every time I check my credit rating? This is one of the biggest misconceptions people have about their credit rating, and it could be the sole reason why they are so out of touch when it comes to the topic. Some may tell you otherwise, but the truth is checking your credit rating does not really impact your credit at all.
When people realize that credit requests from companies affect their credit rating, it starts with the assumption that checking on their credit report hurts their credit. This is why every time you apply for a new loan, your credit rating becomes affected, as creditors will run a credit check to evaluate your eligibility for a loan.
Difference Between Soft Inquiry and Hard Inquiry
Consumer credit inquiries and business/lender inquiries are two completely different things. When you check your credit rating, it is called a “soft inquiry,” which does not affect your credit. Background checks and employment credit checks are known as soft inquiries, and this type of consumer credit application doesn’t appear in your credit report.
When companies, lenders, and credit card issuers check your credit rating, it’s considered as a “hard inquiry” and this takes a temporary hit on your credit score. Now that you know that these types of inquiries affect your credit rating, it’s a good rule of thumb to keep the request to a minimum. Fortunately, you don’t have to worry about permanent damage because most hard inquiries typically disappear after a few months. Remember that most hard inquiries must be approved by you, so there is discretion when one takes place.
How Business/Lender Reports Affect Your Credit Score
Having a good credit score takes more than just paying your bills on time; you also have to behave in a way that does not make you suspicious. Quickly applying for credit cards can be a red flag for credit card agencies, as it suggests that you may struggle to keep up with your current credit cards.
So, now that you have the right information about your credit score, start taking advantage of your free credit reports.
Need help with your debts? Set an appointment with one of our accredited credit counselors. Conquer your finances with the best debt management program. Visit CreditGUARD of America’s credit management page at https://www.creditguard.org/ to learn some useful tips about managing your finances. Call today at 800-500-6489 for a nonprofit financial consultation.