Will Credit Monitoring Hurt My Credit Score?
One of the most common questions that come up when it comes to credit monitoring is, “will credit monitoring hurt my credit score?” There are many myths that credit monitoring platforms can hurt your score in a way that is similar to making a hard inquiry. However, this is not the case.
The Difference Between Credit Monitoring and a Credit Check
When consumers access their credit reports, it does not affect their credit scores. Reviewing a credit report results in a “soft pull,” or “soft inquiry,” meaning it will only be seen on a personal credit report. When a consumer applies for credit, the lender will review the applicant’s credit report, and a “hard inquiry” is commonly added. Hard inquiries can affect credit scores and are shown to other lenders because they may represent new debt that doesn’t yet show on a credit report.
Hard Inquiries Vs. Soft Inquiries
A hard pull, also known as a hard inquiry happens when you apply for new lines of credit such as a new credit card or loan as mentioned above. When a creditor requests your credit report, they are determining how much risk you have as a borrower. These types of inquiries show on your credit report and can affect your credit score because new inquiries can raise a red flag to creditors.
Hard inquiries add some uncertainty to your credit profile. Creditors begin to question why you need a new credit line, and may assume that it’s a sign of instability. That’s why it’s important to know your score before applying for credit so you can see where your credit stands and what your chances of getting approved may be.
“… industry statistics show that six inquiries or more on your credit report means that you may be eight times more likely to declare bankruptcy than if you had no inquiries on your report.” — creditcards.com
On the other hand, soft inquiries do not change your score, and to contrary belief, they frequently don’t show up anyways. Soft inquiries are made when you monitor your credit or when a current creditor may want to check your credit to give you a special offer or promotion. That means that you can keep an eye on your credit score without actually affecting your score, and when it is time to apply for a loan you will know where you stand.
Importance of Monitoring Your Credit Score
We all know that a good score can save you thousands of dollars in interest. A good score can also increase your chances of getting approved. When you don’t know where your score stands, there’s a chance something may have happened to your score since the last time you checked, and you could get denied, causing your score to plummet further. An example would be becoming a victim of identity theft, or missing a bill due to an incorrect address being associated with your account. When using a credit monitoring service like SmartCredit, you can get an immediate alert when there is a change to your credit report or credit score.
Are you keeping an eye on your credit report and score? Do you know where your credit stands, and will you be alerted if there’s fraud on your account? Your future score is waiting for you.