Does Checking Your Credit Score Lower It?
Does Checking Your Credit Score Lower It? Many people are hesitant to obtain a copy of their credit reports – or to check their credit scores. This is because people fear lowering their credit score unintentionally.
The good news is that monitoring your personal credit reports or credit scores has no effect on your credit ratings. In fact, monitoring your credit reports and scores on a regular basis is a good method to ensure that your personal and account information is correct, and it can also help you spot indicators of possible identity theft.
KEY NOTES – DOES CHECKING YOUR CREDIT SCORE LOWER IT:
- Checking your credit reports or scores has no effect on your credit ratings.
- Checking your credit reports and scores on a regular basis is an excellent approach to guarantee that the information is correct.
- Credit scores are affected by hard inquiries made in response to a credit application.
If you’re thinking of buying a home, you likely know how important a strong credit score will be. Mortgage lenders use this all-important number as the key indicator of your financial health. In fact, a less-than-stellar credit score can make or break your ability to qualify for a mortgage and buy the home of your dreams. So, how do you keep your credit healthy? Start by avoiding the following these two very common – and very costly – credit mistakes.
Avoid These 2 Major Credit Mistakes to Keep Your Score High
Applying for Store Credit Card Accounts before Mortgage Application
Your favorite store credit cards may offer fantastic perks, but having too many of these accounts can be tremendously harmful to your credit score. The higher the average age of your credit accounts, the higher your credit score. Opening new accounts lowers that average age, thereby hurting your credit. Remember to always work toward a long trend of positive credit history, and think twice before signing up for new credit accounts that may impact your credit health for years to come.
Minimum Monthly Payments on Debt
If you want to achieve and maintain an excellent credit score, look for ways to pay down high-interest debts as quickly as possible. Paying the minimum payment on your credit accounts each month may meet legal standards and keep your accounts in good standing from a technical standpoint, but this costly move also keeps debts on your account years longer than recommended. Work to pay more than your minimum payment each month, with a goal of doubling your payments when\ever feasible.
Using credit is inevitable in some situations, but it’s important to be savvy about it. Protect your financial health – and your ability to qualify for a mortgage loan – by avoiding these common credit pitfalls.
What Can Lower a Credit Score?
A mistake in any of the five scoring variables described under “How Is a FICO Score Calculated?” will lower your credit score. Here are a couple such instances.
1. Late or missed payments
Payment history accounts for 35% of your FICO score. This includes information on specific accounts (credit cards, retail accounts, installment loans, mortgages, and so on). Also, certain adverse public records (such as liens, foreclosures, and bankruptcies). The number of past-due items on file, as well as the length of time those accounts have been past-due.
2. Too much credit in use
Another 30% of your FICO score is dependent on your debt-to-credit ratio, such as your credit card limitations. A high percentage (over 30%) may suggest that you are overextended and may have future repayment issues. Which is also known as your credit utilization ratio.
3. A short credit history, or none at all
While age isn’t factored into your FICO score, credit history is. Even when all other criteria are equal, a young person’s credit score is lower than an older person’s. Credit history accounts for 15% of your FICO score, including the dates each account was opened and used.
4. Too many requests for new lines of credit
As stated previously, your FICO score does not consider consumer-initiated or promotional credit inquiries. Companies that do this before sending you promotional materials (like pre-approved credit card offers) will not harm your credit score. Your FICO score is 10% dependent on new credit, which includes the number of new accounts (and the percentage of new accounts relative to total accounts), recent credit inquiries (other than consumer and promotional inquiries), and the time since new accounts or credit inquiries were started.
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