Why does checking credit score lower it?
A credit check lowers your score only when it is a hard inquiry, which occurs when you apply for a new credit product like a loan or credit card.
It can impact your score significantly. One hard inquiry can reduce your score by 3 to 5 points. And its impact lasts on your credit score for one year.
When you stack up multiple hard inquiries in just a few months, lenders immediately read it as a sign of financial stress. This perception can quickly reduce your creditworthiness. I’ve experienced it myself; just three hard inquiries in six months were enough to pull my score down noticeably.
On the other hand, checking your own score does not reduce the score. It has a financial term, ‘soft inquiry’. In fact, checking the score more often is actually a smart financial habit that helps you:
- Keep track of your credit report.
- Spot and fix mistakes on your end.
- Take quick action if you notice any discrepancy with the Indian credit bureaus.