Taking a break from financial obligations can offer some breathing room, but it’s important to understand how deferred payments may affect your credit score.
Read more
Asking for a higher credit limit can be as simple as calling the credit card company or completing an online form. In some cases, a credit card company may grant one automatically based on an account history.
To give this subject a bit of context: Most credit cards come with credit limits that determine how much you can spend at any given time. Requesting a credit line increase is something you might consider if you’d like to have more purchasing power, you want to schedule a balance transfer, or you need a cash advance.
Knowing how to increase a credit limit the right way can minimize credit score impacts. Read on to learn more about this important topic.
Key Points
• Credit limits affect credit utilization, a key factor in credit scores.
• Requesting a higher limit may give you more spending power but also cause a temporary drop in credit scores due to a hard inquiry.
• Maintaining low balances with a higher limit can build credit scores.
• Methods to increase limits include online requests, updating income, and contacting issuers.
• Opening a new card boosts available credit but can also impact scores with a hard inquiry.
Credit scores are a measure of your ability to manage debt responsibly. FICO® Scores, which are used by 90% of top lenders, are calculated using these five factors:
• Payment history (35% of your score)
• Credit utilization (30% of your score)
• Length of credit history (15% of your score)
• Credit mix (10% of your score)
• New credit inquiries (10%)
As a reference point, the current average credit limit in the U.S. is around $13,000.
Credit limits are important because they can affect the credit utilization part of your credit score. Credit utilization refers to the percentage of your available credit you’re using. For example, if you have a credit card with a $5,000 limit and a $1,000 balance, your credit utilization is 20%.
Using a lot of your available credit can be detrimental to your credit scores, while keeping balances low can positively impact your scores.
Generally, it’s recommended that you keep the ratio at 30% or less (below 10% can be ideal) for the most favorable credit score impact. A higher ratio could suggest to lenders that you may be struggling to manage spending and debt.
Whether a credit line increase hurts your credit score, or affects it all, depends on how the credit card company reviews your financial information. Specifically, it hinges on whether the credit card company performs a soft or hard inquiry into your credit history.
Remember, credit inquiries account for 10% of your FICO credit score. An inquiry simply means that you have authorized a creditor or biller to review your credit reports and scores. (Inquiries for credit remain on your credit report for two years, though they only affect FICO credit score calculations for 12 months or less.)
When requesting an increase in credit limit that involves a hard pull, you may lose a few credit score points. While the impact isn’t as significant as a late payment or a maxed-out credit card, it’s still worth noting.
If you were to ask for a credit line increase from several cards at once, multiple hard inquiries could cost you more points.
A soft inquiry, on the other hand, has no credit score impact. Checking your own credit score, prescreened credit offers, and credit screenings that are required as part of an employer’s hiring process are examples of soft pulls.
While you may lose a few points initially if your credit card company performs a hard inquiry, asking to increase your limit could help build your credit score over time.
It all goes back to credit utilization. If raising your credit limit on one or more credit cards improves your credit utilization, then you may see a positive effect on your credit score.
Say you have a card with a $10,000 limit and a $5,000 balance. That puts your credit utilization at 50%. But if you can increase the credit limit to $15,000, you instantly shrink your credit utilization to 33%.
The key to making this strategy work is not adding to your debt balance. Going back to the previous example, say that you have to unexpectedly replace your HVAC system to the tune of $5,000. You decide to take advantage of your new higher credit limit to make the purchase.
Now your balance is $10,000. While you still have a $5,000 available credit cushion, you’ve increased your credit utilization to 66%. That could result in a credit score drop until you’re able to pay some of the balance down. So, while asking for a credit line increase can give you more purchasing power, that can work against you if you use it.
There are several ways to get a credit line increase, depending on what your credit card company offers. There are different types of credit cards, and card issuers don’t always follow the same policies with regard to credit limit increases.
Before asking to increase your credit limit, get familiar with the various ways your credit card company allows you to do it. Then consider how much of a credit limit increase you’d like to ask for.
Keep in mind that whether the credit card company grants your request can depend on things like:
• How long you’ve been a customer
• Your account history, including payment and purchase history
• Your income
• Credit scores, if a hard pull is required
With that in mind, here are four ways to get a higher credit limit:
Your credit card company may make it easy to ask for a higher credit limit online. Log in to your account, navigate to the Request Credit Limit Increase section, and fill out the relevant details. You may need to update your income information.
If your credit card issuer offers this option, it’s possible to be approved for a credit line increase almost instantly. But a decision may be delayed if the credit card company wants to take time to review your account or credit history.
Credit card companies may periodically ask you to update your income information when you log in. You may be tempted to skip over this step, but it’s worth taking a moment to do, as the credit card company may use the information to grant an automatic credit limit increase.
Again, whether you’re eligible for an automatic credit line increase can depend on the type of your card and your account history, income, and overall financial situation.
If your credit card company doesn’t allow for automatic increases or credit limit increase requests online, you can always call and ask for a higher limit. You may need to tell them your income, specify how much of a credit limit increase you’d like, and provide a reason for the request.
Calling the credit card company may also be worthwhile if you’ve been denied for a credit limit increase online. You can ask the card provider to reconsider your request, but be prepared to make a strong case (e.g., significantly higher income, on-time payment history) for why it should do so.
If you’ve tried other avenues for requesting an increase in credit limit and been unsuccessful, you could always consider opening a brand-new credit card account. The upside is that you can expand your available credit if you’re approved, which could improve your credit utilization ratio.
The downside of opening a new credit card is that applying can ding your score, since it typically involves a hard inquiry. But if you’re able to keep your credit utilization low, that could help make up the difference in lost points relatively quickly.
If you have good credit, requesting a higher credit limit may be easy. The key is knowing how to make the most of a credit limit increase to improve your credit score. Keeping your balances as low is a step in the right direction. Paying your balance in full each month is even better, since this can help you avoid paying interest on credit cards. Finally, spacing out credit line increase requests and opening new accounts sparingly can help maintain your credit scores.
Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.
You may get a higher credit limit simply by asking your card issuer to raise it. To qualify, keep your financial information up to date, make on-time debt payments, and keep an eye on your credit reports for any incorrect or fraudulent information.
If you define good as above average, yes, it’s a very good limit. The average limit is currently around $13,000. However, if you spend a lot and your credit utilization rises, that can negatively impact your credit score and financial health.
You can increase your credit limit by contacting your card issuer and requesting an increase. You’ll likely need to show responsible credit usage to qualify and perhaps a higher income than in the past. Or you might apply for a new card.
About the author
Rebecca Lake
Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.
SOCC-Q225-019
A secured credit card is one that requires a security deposit — typically several hundred dollars — that is used as collateral in case the cardholder fails to make payments. If you have a brief credit history or dinged credit, a secured credit card can be a good tool for building credit.
Why care about your credit health? Because creditworthiness can come into play when applying for loans, jobs, apartments, and other situations that require a credit check. If you can’t get a regular unsecured credit card, a secured credit card may be a good option.
Key Points
• A secured credit card requires a security deposit, reducing risk for issuers and making it accessible for those with lower credit.
• Advantages can include building credit, lower credit lines, and potential upgrades to unsecured cards.
• Disadvantages are the security deposit, fewer rewards, higher interest rates, and potential credit score impact of applying for a new card.
• The application process involves selecting a card, checking credit, gathering documents, and providing a security deposit.
• Responsible use, such as on-time payments and low balances, can build credit scores and lead to unsecured card upgrades.
A secured credit card is a credit card that requires a refundable security deposit, which counts as collateral until the account is closed.
The security deposit decreases the risk for the credit card issuer, and allows people with damaged or limited credit to build a history of on-time payments. If your credit score is 600 or so (fair) or perhaps lower, you may be able to get a decent secured credit card.
Most secured cards require a minimum deposit of $200 or $300, and that amount is usually equal to your credit limit. If your deposit is on the low end, you’ll want to be careful how you use the card. Credit scoring models typically penalize utilization over 30%, so if your credit limit is $300, you may want to keep your balance under $90. A higher deposit will provide breathing room. A deposit of, say, $1,000 boosts the 30% threshold to $300.
Finally, a heads-up if your credit is bad: Unsecured cards targeting people with bad credit are notorious for high fees and confusing terms. And issuers of these cards usually don’t have good cards to upgrade to.
Here’s how a secured credit card works: You put down your security deposit, and then you get the same amount to spend as a line of credit.
If you want to increase your limit, you’ll have to contribute more to your security deposit. Secured credit card issuers don’t want to be left in the dust if you decide not to pay — or cannot pay — your balance. If that were to happen, they would just take your security deposit.
This type of card may be suitable for people who’ve gone through bankruptcy or are just starting out and have a limited credit history. Typically, a secured card is a better option than a high-interest unsecured credit card that’s targeted to people with a low credit score. That’s because a high-interest card, while enticing, can take years to pay off and end up damaging your financial reputation even further. A secured credit card poses a much lower risk.
A secured credit card looks the same as a regular credit card on a credit report — so users don’t have to worry about other lenders seeing that they have this type of card. And as long as the balance is paid in full and on time every month, you should start to build your credit score.
After using the card responsibly for a certain amount of time, a secured card holder may be able to get an unsecured card. Your secured card company can switch a card to unsecured as well, allowing access to a higher line of credit without a deposit.
Recommended: What Are Purchase Interest Charges on Credit Cards?
Like most things in life, there are positives and negatives to this kind of card.
• Can build credit. Secured cards can allow you to build your credit history if you have limited or damaged credit. You do that by making on-time payments every month — at least the minimum payment, but preferably the full amount to avoid interest charges.
• Lower credit line. A lower limit means you’re less likely to go over it and risk running a high balance. This is helpful for people who are still learning how to use credit responsibly.
• Card benefits. Secured cards may offer basic benefits like fraud protection and cash back, just like you get with an unsecured card.
• Potential to upgrade. Some secured cards allow the holder to switch to a regular unsecured card after a period of responsible use.
• Security deposit. All secured cards by definition require the holder to provide the issuer with a cash deposit. That deposit is refunded once you switch to an unsecured card.
• Fewer rewards. Secured cards don’t offer all the bells and whistles that an unsecured card can. For instance, you may not earn travel points, receive any discounts on goods and services, or get access to airport lounges.
• Interest rate. As noted above, secured cards often carry higher interest rates than regular credit cards. (Of course, the interest rate won’t matter if you’re paying your bill in full each month.)
• Requires a hard inquiry. The issuer will need to run a hard inquiry or pull on your credit report. This usually translates to a slight drop in your credit score.
The application process for a secured card should be relatively quick and simple, provided you prepare what you need ahead of time.
1. Shop Around. Secured credit cards are not all the same. Look for a card with no annual fee (they’re nonrefundable) and a minimum deposit amount that meets your needs. Some cards even offer limited rewards, like cash back. Finally, make sure your payment history will be reported to the three main credit bureaus — that is how you’ll build your credit.
2. Check your credit score. It’s smart to go into the application process knowing exactly what your credit score is. There are several ways to find it without having to pay a fee. Visit AnnualCreditReport.com, for example. Your bank may also provide your credit score online for free.
3. Collect your information and paperwork. Application requirements vary depending on the card issuer. To make sure you have all the documentation you need, gather the following:
– Proof of identity, such as a driver’s license, passport, or other photo ID.
– Proof of address, like a recent utility bill.
– Bank account info. If you have a checkbook, your bank info and account number appear on your checks.
– Citizenship or residency info.
– Recent pay stub, W2 form, tax return, or other proof of employment and income.
– Social Security number. You don’t have to bring your card; just make sure you know your number.
4. Complete the application. You can do this in person if your credit card issuer has a branch near you. You may also do it over the phone with a customer service rep — just be aware you’ll need a way to provide your documentation, either in person or via upload. The easiest method may be online, as long as you have access to a computer or smartphone that allows you to upload documents or images.
5. Provide a deposit. This is usually done via online transfer from your checking or savings account.
If you’re nervous about getting approved, taking these extra steps can help you maximize your odds.
1. Review your credit report. Request free reports from the three major credit agencies at AnnualCreditReport.com, as noted above, and review them carefully. If you find any errors — from outdated information to unfamiliar accounts — file a dispute to have the data corrected or removed.
2. Pay your bills on time. Many people hit a financial rough patch at some point. The important thing is to show a recent history of on-time payments. If you can point to a year’s worth of good habits, credit card issuers will be more likely to consider you worth the risk.
3. Maintain a steady job. Even if you don’t have a high income, job security reassures credit card companies that you have the cash flow you need to pay your bills. Your employer may be able to give you a reference letter stating how long you’ve worked for the company and your track record of reliability and good work.
4. Become an authorized user. Got a family member or close friend with great credit? Ask them if they’ll add you as an authorized user on their credit card. Over time, their good habits will rub off on your credit history. And that may give you the boost you need to get approved for your own card.
Major credit card companies such as MasterCard, Visa, and Discover offer secured credit cards. This means you can use your card anywhere these brands are accepted.
Some secured credit cards offer benefits like cash back and free access to your credit score.
Many major credit cards also provide liability protection, so you won’t be responsible for fraudulent charges on your account. You may have to pay fees, such as a monthly maintenance fee, annual fee, balance inquiry fee, or an activation fee.
Though you may be able to get a secured credit card with a lower interest rate than an unsecured credit card, the average rate for secured cards can still be high, so be prepared for those charges.
It’s smart to do some online comparison shopping of different credit cards to see which one has the most appealing terms. However, it’s best not to apply for too many; one hard inquiry can cause a credit score to drop 5 to 10 points temporarily. If you apply for more than one or two cards, that could have a negative effect on your credit score.
When you start using your card, paying it on time is going to impact your credit score rating. If you may not remember to pay it each month, you could set up automatic payments to ensure your bills are up to date. You can also check your credit score every month to make sure it’s trending upward.
Secured cards are a great way to build credit if you have a low credit score or a limited credit history. How they do that is not so different from how a regular credit card works.
• First, you need to pay your bills on time, each and every month. Missing one payment will undo all your good work up to this point. If you don’t trust yourself to remember every single time, there’s a simple solution. Set up automated payments through your bank so that your card is paid on the same day each month. You can choose to pay the minimum, a set amount over the minimum (say, $100), or the whole balance. What’s more, paying off the balance each month will save you money on interest.
• Second, avoid running up a high balance. In this case, a high balance just means an amount approaching your credit limit (the same amount as your security deposit). Try to keep your credit utilization — the percentage of credit that you actually use — below 30%. If your credit limit is $500, the most you should charge per month is $150 (this assumes you have no other debt). As you rack up a history of on-time payments, you can request a higher limit, though that will require a higher deposit.
Even though getting a secured credit card with limited or damaged credit history is possible, an applicant may still be denied. Anyone who is denied a card should receive a letter from the credit card issuer explaining why. Perhaps they didn’t fill out the application properly and all they need to do is fix it, or their credit score wasn’t high enough.
If the reason has to do with the applicant’s credit report, they can get free access to their report through AnnualCreditReport.com and see their entire credit history. For example, the credit report may reveal that the credit utilization ratio or the amount of debt compared with the amount of credit a person has is too high. An applicant could start paying down debt more aggressively in order to bring down the credit utilization ratio and have a better chance of being approved for a secured credit card.
Another factor that may cause a denial is if an applicant doesn’t make enough income or can’t prove income. The credit score just may be too low as well.
A secured credit card is one that requires a security deposit that is used as collateral in case the cardholder fails to make payments. Secured cards have more relaxed application requirements than unsecured cards, making them popular with people who have limited or damaged credit histories. Most secured cards report to the major credit bureaus, allowing holders to build up a positive credit history over time.
Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
This content is provided for informational and educational purposes only and should not be construed as financial advice.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.
SOCC-Q225-012
Read more
Most businesses report information to the credit bureaus every 30 to 45 days. Each on-time payment you make may barely affect your score, while a missed payment can have a significant effect.
But how often does your credit score update? Let’s find that answer, and learn how to keep an eye on your credit history and credit score.
Recommended: How to Build Credit Over Time
Whenever consumers take some sort of action relating to their credit, their score, usually a number between 300 and 850, will fluctuate.
For instance, if they apply for a loan or miss a credit card payment, their score could change.
There is no set date for a credit score update because a lender or creditor may send information to the three main credit bureaus at different times: Experian one day, Equifax five days after that, and TransUnion a week later.
An update, though, will occur at least every 45 days.
Rather than constantly checking for updates, you might want to focus on long-term goals like paying off debt, always sending payments on time, and ensuring that your scores are going in an upward direction.
Recommended: Which Credit Bureau Is Used Most?
Lenders most often use FICO® Score, but the credit bureaus introduced the VantageScore® in 2006 to provide a score that was more consistent among the three credit agencies.
This is how the FICO Score 8 and the latest VantageScore models break down:
| FICO | VantageScore |
|---|---|
| Exceptional 800-850 |
Excellent 781-850 |
| Very Good 740-799 |
Good 661-780 |
| Good 670-739 |
Fair 601-660 |
| Fair 580-669 |
Poor 500-600 |
| Poor 300-579 |
Very Poor 300-499 |
People with high scores typically have access to higher lines of credit and lower interest rates. Those with low credit scores may not be approved for certain credit cards and loans. And if approved for, say, a mortgage, they will usually pay a much higher mortgage interest rate.
(That said, a conventional mortgage lender is free to set its own requirements when it comes to credit scores. Government-backed loans still have credit score requirements, even if they’re lower.)
Under federal law, consumers are entitled to one free copy of their credit report every 12 months from each of the main credit reporting agencies, TransUnion, Experian, and Equifax.
AnnualCreditReport.com is the only authorized website for free credit reports, according to the Federal Trade Commission.
Consumers can also call 1-877-322-8228 and provide their name, address, Social Security number, and date of birth to verify their identity.
If you want to check your credit history more than once a year, you can ask one or all three credit reporting bureaus, for a small charge, for another copy.
Why check your credit report periodically? Mainly:
• To make sure the information is accurate and up to date before you apply for a car or home loan, buy insurance, or apply for a job.
• To help guard against identity theft.
Recommended: How To Read A Credit Report
The free annual credit reports do not include your credit score — or more accurately, scores. Your credit score from each of the credit bureaus will vary based on the information each has. Lenders also use slightly different credit scores for different kinds of loans.
How to get your credit scores then? Here are a few ways:
• Buy a score directly from the credit reporting companies or from myfico.com.
• Look at a loan statement or a credit card statement. Some financial companies provide credit scores for customers as a perk.
• Use a credit score checker. Some services give consumers access to their credit scores but charge for premium services like checking a score daily. Other sites may require that you sign up for a credit monitoring service with a monthly subscription fee in order to get your “free” score.
• Sign up for an app like SoFi, which provides free weekly updates on your credit score and tracks all of your money in one place.
When signing up for credit score checking websites, it’s important for consumers to look at the terms of service and ensure they’re not being charged for premium services they do not want.
Also, it’s best to avoid an “educational” credit score vs. a score that a lender would use. For some, there will be a meaningful difference, the Consumer Financial Protection Bureau says.
Learning about what factors make up a credit score can help consumers raise their scores. Main factors that contribute to the score, in order:
• Payment history (35-40%)
• Credit utilization
• Length of credit history
• New credit
• Credit mix
In terms of payment history, the most important factor when calculating a score, it’s critical to always repay debts on time.
The credit utilization ratio is the amount that is owed in relation to how much credit a person has overall. Keeping your credit utilization ratio below 30% is commonly recommended.
For the length of the credit history, consumers can increase their score by not closing cards. The longer someone’s credit history is, the better.
Applying for new credit cards and loans that require a hard inquiry into a credit report could bring down a score, even if the result is approval. However, if a score does go down, it shouldn’t take long for it to go back up. It’s multiple hard inquiries on a credit report in a short period that can cause damage. Then again, if someone is shopping for a mortgage or auto loan, both FICO and VantageScore account for multiple hard inquiries in a grace period of 14 to 45 days.
Credit mix refers to credit cards, student loans, auto loans, personal loans, and mortgages. By having a mix, consumers show that they can manage all kinds of debt.
Recommended: What Credit Score is Needed to Buy a Car
Having a high score can help consumers in a number of scenarios.
They will save money, and potentially a great deal of money if they gain access to lower interest rates.
The higher a score is, the more credit someone will be able to access as well.
Consumers can reach their financial goals quicker and utilize better products. For example, they may get approved for a credit card that offers perks like bonus travel rewards or a high cash-back rewards rate. They might also be able to use a card with a 0% introductory APR or 0% balance transfer rate for a certain period.
People with a high score may be able to rent a better apartment or home since landlords will check prospective tenants’ credit.
They may gain access to better car insurance rates and be able to avoid paying deposits to utility companies and cellphone providers.
Improving a credit score could take time, but it’s worth it because in the long run, consumers will save money and potentially reach their financial goals that much faster.
Recommended: Should I Sell My House Now or Wait
How often does your credit score update? All the time, really, but once a month is a good barometer. You can order a free credit report every year, or you can see updates in your credit score for free or for a fee.
SoFi’s money-tracking tool offers a host of benefits at no charge:
• Get weekly updates on your credit score.
• See changes to key factors contributing to your credit score.
• Link your checking, savings, investment, and retirement accounts as well as credit cards, student loans, and mortgages. Manually add an account or asset to see your entire net worth.
About the author
Kylie Ora Lobell
Kylie Ora Lobell is a personal finance writer who covers topics such as credit cards, loans, investing, and budgeting. She has worked for major brands such as Mastercard and Visa, and her work has been featured by MoneyGeek, Slickdeals, TaxAct, and LegalZoom. Read full bio.
SORL21003
Ready for some good news? If you want to check your credit score, you can do so without worrying about lowering it.
So why is it so common to think that will happen?
It’s easy to see where the confusion stems from, so let’s look at what a credit score is, why checking a credit score isn’t a bad thing, and where credit damage can actually come from.
First things first: A credit score is a number based on a credit report that helps creditors determine how risky it would be to lend money to a borrower.
The risk level influences if an applicant is given credit, and if so, the terms and interest rate. Having a high credit score can make it much easier to take out a loan and get more favorable interest rates, or be approved to rent an apartment.
The information in a credit report determines a credit score. The following factors influence a credit score:
• Payment history
• Outstanding balances
• Length of credit history
• Applications for new credit accounts
• Types of credit accounts (such as mortgages or credit cards)
Consumers don’t actually have just one credit score; they have multiple ones. Scores are calculated by credit reporting agencies that maintain credit reports. Lenders can use their own internal credit scoring systems as well.
Recommended: What Is Considered a Bad Credit Score?
Nope. There are many misconceptions surrounding credit scores, and one of the biggest ones is that checking one’s credit score will lower it. This is simply, and happily, not true.
Checking your credit score once, or even multiple times, will not damage it. Requesting a copy of a credit report will also not damage a credit score.
In fact, it’s good to keep a close eye on your credit report and score. It can be especially helpful to review a credit report on occasion to make sure there are no errors that may cause the score to drop.
Online tools like a spending tracker app can allow you to track your credit score regularly and get important insights into your spending habits.
Recommended: What Is The Difference Between Transunion and Equifax?
Certain credit inquiries made by outside parties like lenders and credit card issuers affect a credit score.
You’ve probably heard of soft and hard “pulls,” or, formally, soft and hard inquiries. Only hard inquiries — a full check of credit history — affect a credit score.
• You check your own credit report.
• An insurer pulls credit for a quote.
• A company views a credit report during a background check.
• You seek to be prequalified for a personal loan or mortgage.
• A credit card or insurance issuer sends a prescreened offer — sometimes called a “preapproved” offer.
You apply for a:
• Mortgage
• Auto loan
• Credit card
• Student loan
• Personal loan
• Rental
Hard inquiries may stay on a credit report for two years, although they usually only affect credit scores for one year.
Multiple hard inquiries in a short time frame could make a customer look higher risk because it could suggest an intention to rack up debt. Then again, if you’re shopping for an auto loan or mortgage, multiple inquiries are generally counted as one for a period of time, typically 14 to 45 days. The exception generally does not apply to credit card inquiries.
Consumers can see these inquiries on their credit report.
Consumers should consider checking their credit report at least once a year to make sure there are no errors that are hurting their credit score and that their report is fully up to date. Regular checks can also alert consumers to fraud and identity theft.
It can also be smart to check a credit report before making a big purchase that requires a loan.
Doing so can even be helpful when job searching, as some employers review credit histories when hiring.
Consumers are entitled to a free (and completely safe!) credit report once a year from the three major credit reporting bureaus:
• Equifax
• Experian
• TransUnion
There are a few ways to gain access to these free reports.
• Online at AnnualCreditReport.com.
• By phone at (877) 322-8228.
• By mail. After downloading and completing the Annual Credit Report request form, consumers can mail the completed form to:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5283
Note: These free annual credit reports do not include credit scores. They are meant to allow an individual to ensure accuracy and check for identity theft.
To monitor credit throughout the year, it can be a good idea to space out the requests for these free reports, but requesting them all at once is totally fine.
After you’ve received your free credit report for the year from a specific reporting company, you can request another report down the road, but you’ll have to pay for that one.
Additional free reports are available to those who experienced an “adverse action” because of their credit report, are unemployed, and certain other situations.
Recommended: Why Do I Have Different Credit Scores?
Does checking your credit score lower it? Not at all, and in fact, it’s a good idea to keep an eye on your credit landscape. Your own inquiries are different from outside hard pulls, which can happen when you apply for a mortgage, credit card, student loan, auto loan, or something that requires a full check of credit history. A hard inquiry could stay on a credit report for two years, though it typically only affects a credit score for a year.
Checking your credit report at least once a year is a good way to ensure there are no errors that could damage your score. It’s also a good idea to keep tabs on your finances year-round, and a money tracker app can help you manage your spending and saving. The SoFi app connects all of your accounts in one convenient dashboard. From there, you can see all of your balances, spending breakdowns, and credit score monitoring, plus you can get other valuable financial insights.
About the author
Jacqueline DeMarco
Jacqueline DeMarco is a freelance writer who specializes in financial topics. Her first job out of college was in the financial industry, and it was there she gained a passion for helping others understand tricky financial topics. Read full bio.
See what SoFi can do for you and your finances.
Select a product below and get your rate in just minutes.