When you apply for a loan or a credit card, the lender checks your credit score. That can knock off a few points.
But the same is not true when you check your own credit.
When you — or a creditor looking to preapprove you for a loan or credit card — check your score, it’s considered a soft inquiry.
That’s different from applying for credit, which results in a hard inquiry. A hard inquiry might cost you up to five points according to FICO, the creator of the most widely used scoring formulas. With VantageScore, an increasingly popular credit scoring model, an inquiry could cost 10 to 20 points. So, if you apply for several credit cards close together, you might see a significant drop in your credit scores.
A hard pull stays on your credit report for two years, but its effect on your credit score fades sooner than that. Here’s how hard inquiries can stack up:
- When you submit a rental application, the landlord will run a credit check using a service that may do either a hard or soft pull. If you are concerned, ask beforehand.
- Generally, multiple applications for auto loans and mortgages are treated as a single hard inquiry — but only if you rate-shop within a window that can vary from 14 to 45 days, depending on the scoring model.
- Multiple applications for credit cards will result in multiple hard inquiries. Generally, you should leave six months between credit card applications.
- Claiming a preapproved offer on a credit card or loan will result in a hard inquiry.
Checking your credit is smart
Checking your credit scores regularly can alert you if something is amiss. A large, unexplained change in your score could be your first indication of potential identity theft or a mistake in your credit reports.
Before you apply for credit, it makes sense to have an idea of what the lender or credit card issuer will see when evaluating your application. Knowing your credit score can keep you from needlessly losing points by applying for products you won’t qualify for.
Also, knowing where you stand gives you the opportunity to polish your credit score before you apply for a loan or credit card.
Best practices for checking your score
Keep these items in mind when you check your credit score.
There are many different kinds of credit scores, often with several versions. When you monitor your credit score, be sure to use the same credit score and the same version of it each time. Otherwise, you’re comparing apples and oranges. Credit scoring models do measure mostly the same things, but they may weight them differently and may use different scales.
You don’t need to buy credit monitoring or identity theft protection to see your scores. You have several ways to get your score for free; look for a site that offers free credit report information, such as NerdWallet. Some sites will try to entice you to sign up for additional services, so be prepared to resist the upsell to anything with a recurring charge.
Updated Sept. 12, 2016.
Bev O’Shea is a staff writer at NerdWallet, a personal finance website. Email: firstname.lastname@example.org. Twitter: @BeverlyOShea.