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Does Your Credit Score Drop When You Check It?

3 min read

Does Your Credit Score Drop When You Check It

Written By

Barry Choi
Barry Choi

Reviewed By

Clay Shiffman

Checking your credit score regularly is a good practice since it allows you to monitor your progress and catch any suspicious activity. But, have you ever asked yourself, does your credit score drop when you check it?

In most cases, checking your credit score will have no impact on your credit score at all. Even checking it multiple times a month won’t make a difference. That said, if a lender is performing a hard credit check on you, then your credit score could drop. What it comes down to is the type of inquiry that’s done on your credit profile.

What is a soft inquiry?

A soft inquiry, or a soft check, has no impact on your credit score whatsoever. This type of credit check is more common than you think and typically happens in the following situations:

  • You’re checking your own credit score

  • A financial institution or lender is seeing if you qualify for new products

  • You, your employer or your landlord request your credit report

Simply checking your own credit score does not hurt it since all you’re doing is finding out what your number is. For reference, your credit score is a number between 300 and 900. The higher your number, the more creditworthy you are.

Financial institutions often perform soft inquiries on their clients. With the information that comes back, they may pre-qualify you for products, such as credit cards and loans.

As for your credit report, it’s a detailed look at your credit history over the last seven years. It shows all active credit accounts. You can request yours at any time for free. Sometimes, your landlord or potential employer may request it with your permission. This is done to ensure you can handle credit responsibly.

What is a hard inquiry?

So when does checking your credit score lower it? That would happen when a hard inquiry, or hard check is performed. In most cases, this would happen in the following situations:

  • You’re applying for a credit card

  • You’re applying for a loan such as auto financing, a line of credit, or mortgage

Essentially, whenever you formally apply for any type of credit or loan, your credit score will drop. That’s because lenders will want a more detailed look at your credit profile before considering your application.

How much does your credit score decrease when it is checked?

If a hard inquiry is performed on your credit profile, you can expect your credit score to drop by five to 10 points. This decrease in your credit score will happen regardless of whether you’re approved or not for the credit card or loan.

While there’s no way around the drop in your credit score, you shouldn’t obsess over it. In most cases, if you continue to use your credit responsibly, then you should see your credit score return back to where it was a few months later.

In other words, don’t stress out applying for a new credit card or loan. The decrease you’ll see in your credit score won’t typically make a difference in the grand scheme of things.

How to prevent your credit score from dropping rapidly

Having your credit score drop a few points when a hard inquiry is performed is normal, but you want to avoid the following situations as it could drop your credit score significantly in a short period:

  • Applying for multiple credit cards in a short period: Each application is a hard inquiry, so if you apply for multiple cards, your credit score could take a huge hit.

  • Making late payments or missing them entirely: Your payment history plays a significant factor in determining your credit score. Missed and late payments are a huge red flag for the credit bureaus.

  • Using your credit cards excessively: The amount of credit you’re using relative to how much total credit you have access to is known as your credit utilization ratio. The credit bureaus typically prefer your ratio to be below 30%.

How to check your credit score for free

In Canada, the quickest way to check your credit score for free is to use Borrowell and Intuit Credit Karma. In addition, many financial institutions also allow its customers to check their credit scores for free when logged into their online accounts.

If you want to see your entire credit report, you’ll have to contact Equifax and TransUnion - the two credit bureaus in Canada. That said, they can make things a bit complicated. For your free report, you need to fill out some paperwork and mail it to their office. Going this route can take up to 20 days, but it’s free. If you want instant online access, you’ll need to pay for a subscription.

To be clear, Equifax and TransUnion would have different credit scores for you. That’s because each gets their information from different financial institutions. Some financial institutions report to one bureau, while others report to both. To get an accurate look at your credit history and score, you should check with both credit bureaus at least once a year.

The bottom line

Only hard inquiries drop your credit score, so feel free to check your credit score as much as you like since it won’t affect things. That said, if you’re concerned about your credit score, focus on good credit habits, as that’s how you’ll be able to improve and keep your credit score in good standing.

Note: KOHO product information and/or features may have been updated since this blog post was published. Please refer to our KOHO Plans page for our most up to date account information!

Barry Choi

Barry Choi is an award-winning personal finance and travel expert. He regularly appears on various shows in Canada and the U.S., where he talks about all things money and travel. His website - Money We Have - attracts thousands of visitors daily, looking for the latest stories on travel and money.



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