Does It Hurt My Credit When I Check My Rate or Score?
November 17, 2016
Credit inquiries count for 10% of your overall credit score.
Surprised it’s that low? I was. It’s pretty engrained in us responsible Canadians not to apply for credit willy-nilly.However, getting quotes online with personal loan companies like Borrowell are considered “soft” inquiries and do not affect your credit score. Similarly, it won’t affect your credit score when you check your credit score with Borrowell.It’s only if you’re going around applying for a lot of credit from other companies in a short period of time that the bureau gets worried. While calculating your credit score, credit bureaus will review all of your requests within the past six to 12 months.But applying for the occasional product isn’t going to hurt your score much, if at all.What if I’m rate shopping?
The good news is that if you’re getting quotes on a mortgage or vehicle loan, the credit bureau doesn’t count them all as separate inquiries. It knows you’re probably not going to get 3 mortgages – you’re just comparing rates. So they’ll combine them all into one inquiry.
What’s the difference between a “soft” and a “hard” inquiry?
Credit inquiries can be seen as soft or hard inquiries or “pulls”. A soft inquiry will not affect your credit score, as it includes times you yourself are checking your score (yay you!), when a company you do business with is checking on your credit, or when a company (like Borrowell) is giving you a quote but you haven’t taken the loan yet.
However, a hard inquiry means that a potential lender IS reviewing your credit, because of an application for further credit. This may include a mortgage, new credit card, or vehicle loan.
What can we do to control credit inquiries?
- Keep your rate shopping within a 30 day time period. Don’t worry if you are shopping around for a good rate on a mortgage or vehicle loan. If you make these inquiries within 30 days, they’ll be combined and seen as one inquiry.
- Ensure timing is appropriate. Before going ahead and opening 3 credit cards because they have great reward point programs, consider your credit score. If you have only recently applied for other credit, focus on building a credit history first.
- Know before you approve. If a business mentions that they will be performing a credit check, always ask whether the inquiry will be hard or soft. If it is a hard inquiry, make sure that you haven’t been allowing too many of these within the year.
Borrowell is looking forward to seeing a dramatic change in your credit score, and we cannot wait to see what comes out on the other side!
We know you are already working on the steps we’ve set out for you this week, and we can’t wait to get to the next. See you soon!