Introduction

Understanding your credit report and the impact of inquiries on your credit scores is crucial for maintaining a healthy financial profile. At O1ne Mortgage, we are committed to helping you navigate the complexities of credit management. In this article, we will guide you through the process of checking your credit report, explain the difference between soft and hard inquiries, and discuss how these inquiries can affect your credit scores.

How to Check Your Credit Report

Checking your credit report is a straightforward process that you can do for free. Here are the steps to follow:

• Visit AnnualCreditReport.com to access your credit reports from all three national credit bureaus: Experian, TransUnion, and Equifax.
• Sign up for a free Experian CreditWorks℠ Basic account to monitor your Experian credit report.
• Consider upgrading to a paid Experian CreditWorks℠ Premium account for additional benefits, including access to your TransUnion and Equifax credit reports.

Under federal law, you are entitled to one free credit report from each of the three bureaus every 12 months. Regularly reviewing your credit reports can help you spot inaccuracies and detect unauthorized activity, which could be a sign of credit fraud or identity theft.

How Do Inquiries Impact My Credit Scores?

Inquiries, or requests to view your credit reports, are categorized as either “soft” or “hard” inquiries based on their potential impact on your credit scores.

Soft Inquiry

A soft inquiry occurs when you check your own credit report or when a monitoring service you authorize does so. Soft inquiries also include checks performed by lenders with whom you have existing accounts for account management purposes and credit checks by lenders for marketing credit products to you. Importantly, soft inquiries do not affect your credit scores.

Hard Inquiry

A hard inquiry, on the other hand, is added to your credit file when a lender requests your credit report or a score based on it for processing a credit application. Hard inquiries can slightly lower your credit scores, typically by less than five points. These reductions are usually short-lived, and your scores will generally rebound within a few months as long as you keep up with timely debt payments.

Why Do Inquiries Have an Impact on Credit Scores?

Hard inquiries can be a concern for lenders because they may indicate that you have taken on new debt that hasn’t yet been added to your credit report. Credit scoring systems, such as the FICO® Score☉ and VantageScore®, account for this uncertainty by deducting a few points from your scores. However, if you maintain on-time payments on all your accounts, both old and new, your scores will typically recover within a few months.

The Bottom Line

Regularly reviewing your credit reports is a wise practice to ensure accuracy and protect against unauthorized activity. Checking your own credit report will never hurt your credit score and can help you promote long-term credit score improvement. At O1ne Mortgage, we are here to assist you with all your mortgage service needs. Call us today at 213-732-3074 to learn more about how we can help you achieve your financial goals.