Credit 101

4 Times a Credit Pull Won’t Hurt You

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4 Times a Credit Pull Won't Hurt YouMany consumers believe their credit score will take hit each time a copy of their report gets commissioned. However, the three-to-five point ding is only associated with a hard inquiry, which is generated essentially when someone is trying to decipher whether you qualify for a line of credit or a loan. Other credit pulls are considered soft inquiries and won’t hurt your score. Here’s a roundup of the most common ones.

Personal credit checks

Consumers can’t use credit inquiries as an excuse not to monitor their own credit. Requesting your own report (plus score) from any of the major credit bureaus is classified as a soft inquiry and won’t impact your score. As such, consumers should, at the very least, request the free credit report they are entitled to once a year from AnnualCreditReport.com, though best practice is to check your credit about twice a year or prior to applying for a new loan. Another way to do a soft pull without dinging your credit is to check out your Credit Report Card.

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Check Your Credit For FreeCredit check conducted by a prospective employer

While debate abounds about whether a credit check should be used during the job application process, your score won’t be affected if a prospective employer asks to pull your report.  (Remember, the employer can’t see your score. The bureau only provides a version of your report.) This is because, similar to a personal credit pull, there is no line of credit associated with the inquiry.

Opening a checking account

While some banks do conduct a credit check when someone comes in to open a checking or saving account, the practice is largely classified as a soft inquiry since the bank isn’t lending its new customer any money. Keep in mind, if you tack on additional banking products while opening up an account, like a new credit card or overdraft coverage tied to a new line of credit, you will see a new hard inquiry appear on your report.

[Free Resource: Check your credit score and report card for free with Credit.com]

Multiple inquiries regarding the same loan

Most credit scoring models, including the widely known FICO, will group multiple inquiries within a certain time period, usually around 45 days or so. This means, while the first inquiry regarding a mortgage, an auto loan or even a rental agreement is likely to ding, subsequent shopping around won’t hurt you.

It should be noted, though, this rule doesn’t go into effect when you apply for multiple credit cards within a short timeframe.  Each of those credit inquiries can still wind up costing you up to five points since the cards in question are all considered separate lines of credit.

Image: iStockphoto

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