September 30th, 2010 09:14 EST
Scared to Pull Your Credit Report? Fear Not.
Scared to pull your credit report? You aren`t the only one. Most people assume that if they pull their credit report, they will hurt their credit score.
And while it is true that your credit score will drop if you apply for too many loans or credit cards, most people are more afraid of credit inquires that they ought to be.
Here is a secret almost no one knows: Only some credit inquiries hurt your score. You can (and should) pull your credit report regularly, without hurting your score.
Let us start by taking a look at what does hurt your score.
The credit-scoring bureaus will only lower your score for hard inquiries. Hard inquiries are those made into your credit score by lenders for the purpose of deciding whether to approve loan applications. A hard inquiry will be posted to your credit report if you apply for:
- A credit card, or respond to a "pre-approved" credit card offer,
- A home loan,
- A car loan,
- A business loan,
- A line of credit,
- A debt consolidation loan,
- A retail store card, or
- Any other loan.
But soft inquiries--inquiries into your credit score for any other purpose--will not hurt your credit score (though they will appear on your credit report). Soft inquiries include inquiries:
- A lender makes for the purpose of determining whether to send you a "pre-approved" credit card offer,
- An employer makes when deciding whether to hire you,
- An automobile insurance company makes to determine your insurance rate,
- A landlord makes for the purpose of determining whether to grant you a lease,
- You make into your own score, and
- All other non-lender-related inquiries into your credit score.
So pull your credit report and pull it today! Check for evidence of identify theft, look for other mistakes, and then begin the process of building your credit score to 720.
In fact, failing to pull your own credit report is one of the biggest credit score mistakes a person can make. If you do not know your credit score, you cannot make changes that allow your score to increase to 720, the score necessary to receive the best interest rates and loan terms. And if you are applying for a job, looking for a home to rent, or renegotiating your insurance rates, you need great credit!