Are you among those who check for updates on your WhatsApp, Facebook or any other social media account often? This often becomes obsessive. Going along the same lines, Ankush Tiwari, an architect from Hyderabad loved checking his credit score. He was happy that he did not have to pay for the scores anymore and checked his credit score online. This practice went on until a couple of his friends told him that checking credit scores repeatedly will lower the scores. He did believe them until he did his own research on the subject.
Let us read further to see what he found out.
Credit scores are numerical representations of your credit behavior and it considers factors like
Additional Reading: Is It Bad to Check Your Credit Score
Yes, credit inquiries do affect your credit score. At the same time, it is important to know what kind of credit inquiries affect your score. There are 2 kinds of credit inquiries - soft inquiries and hard inquiries. It is good to know what kind of inquiries are categorized as hard and soft inquiries and how do they both affect your score.
Hard inquiries: Hard inquiries are those when a lender inquires about your credit score to the credit bureau. This happens when you apply for a loan or credit card with a lender. You might be wondering how does a hard inquiry affect your score?
A genuine application for credit does not do any bad to your score. However, frequent applications and applications that keep getting rejected repeatedly are the ones that are bad for your score. The credit bureaus perceive this kind of behavior as credit hungry behavior. Such an individual is looked as someone who fails to live within his resources of income. Hence lenders do not feel comfortable about lending to such individuals.
Consequently, it is good to keep a check over frivolous applications for credit. Apply for credit only when you genuinely have a reason to do so. It is also important to keep checking your credit score at least once in 3-6 months so that you learn if there have been any fraudulent inquiries for your PAN.
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Soft Inquiries: Soft inquiries are those when an individual himself checks his credit score. The Reserve Bank of India has mandated that an individual should have access to his/her credit score at least once a year, free of cost. Thanks to the many fintech companies like us which makes your credit score accessible at any time, you need not wait for a year to look at your credit scores.
Soft inquiries do no harm to your credit scores. In fact, one should make it a practice to check credit scores once in 3-6 months and every time before applying for a loan/credit card to know where you stand. This would help you to take corrective action should your credit score be lesser. It also avoids rejection of the application.
Therefore, check your credit scores and remain creditworthy at all times.