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Checking your credit doesn't hurt your scores

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When you apply for a loan or a credit card, the lender checks your credit score. That can knock off a few points.

That is not true if you check your own credit.

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When you — or a creditor looking to preapprove you for a loan or credit card — check your score, it’s considered a soft inquiry.

Applying for credit results in a hard inquiry, which 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 four credit cards close together, you might see a significant drop in your credit scores. Generally you should leave six months between credit card applications.

A hard pull stays on your credit report for two years, but it doesn’t affect your credit score that long. Here’s how you can rack up hard inquiries:

  • When you submit a rental application, the landlord will run a credit check using an association that may do a hard or soft pull. If you are concerned, ask beforehand.
  • Generally, multiple applications for secured 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.
  • 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. The last thing you want is for those “few points” to accumulate so that you take a big hit.

Also, credit scores generally come with information about what you can do to improve before you apply for a big loan.

Best practices for checking your score

There are a couple of things you’ll want to keep in mind when you check your credit score.

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There are many different kinds of credit scores that come with different versions. When you monitor your credit score, be sure to use the same credit score and the same version of it. Otherwise, you’re comparing apples and oranges. Credit scoring models measure mostly the same things, but weight them differently and use different scales.

You don’t need to buy credit monitoring or identity theft protection to see your scores. Avoid signing up for a “free” credit score that requires you to sign up for a monthly service with a recurring charge. If you want a one-time peek at your score, you can buy it, but there may be ways to see it for free. Some credit issuers, for instance, offer free FICO scores to cardholders; that can give you a sense of where you stand.

So go ahead and check your score. It won’t hurt, and it might help to know where you stand so you can make adjustments accordingly.

Bev O’Shea is a staff writer at NerdWallet, a personal finance website. Email: boshea@nerdwallet.com. Twitter: @BeverlyOShea. This article first appeared at NerdWallet.