It is very important to pay back the loan properly and check your credit score regularly. Having a good credit score increases your creditworthiness. You need to have a good credit score if you have to take out subsequent loans at regular intervals, especially if you have to take out a personal loan.
But it is a bad thing that some people check the credit score too often. We have heard many people say that if you do this, it will have a bad negative impact even on a good credit score and the credit score will drop drastically. If you have heard this too, you must be facing confusion. A good credit score is necessary to maintain our creditworthiness well. But if you check how much it is, you are confused as to how the score will decrease! Find out if this information is true here…
Read More : Simple ways to help you maintain your credit score in a better way..!
Is checking your credit score too often bad?
While credit score checking is an important part of the loan process, there are a few ways to check your credit score if you are a regular credit user. Before that you must first understand the difference between Hard Inquiry and Soft Inquiry related to credit score.
Tenderness investigation:
This includes you checking your credit report or having a company or organization check your credit score for background verification.
Hard Inquiry:
This checking process happens every time you apply for new credit. Lenders look at your credit score and file a report to verify your eligibility.
Now we have seen these methods of investigation or not.! The first category will definitely not have any negative impact on your credit score. Because you check your credit score yourself. Similarly, there is no harm in having your credit score checked only for background verification.
But this second type of hard inquiry occurs when a lender or company requests a review of your credit report as part of your loan application process. Your loan history is an important factor in determining how much a hard inquiry will affect your credit score. If you have a healthy credit history and credit score before you apply for a new loan, a new hard inquiry may do much less damage to your credit score.
That’s why these types of inquiries can be very damaging to the credit scores of individuals with a short credit history or few credit accounts. You may run into this problem if you frequently apply for loans. Simply put, when lenders check your credit report, if you have maintained a good credit score, there is little risk. But if you’ve applied for multiple lines of credit at once, the many hard inquiries that go through can affect your credit score.
Experts suggest planning your finances properly and applying for loans only when necessary to avoid damaging your credit score.
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