Does checking your credit report affect your credit score?

The short answer… no.

In fact, checking your score regularly is a good habit to get into. Cybercrime is at an all time high, and Cybersecurity researchers nationwide say they have seen an increase in data being stolen from users and an increase of breaches within the video conferencing platforms during lockdown (thank you Covid-19). It is therefore imperative that one gets into the habit of regularly perusing their reports, as this allows you to keep track of changes to your report:

  • check for mistakes;
  • check for fraud,
  • as well as keep an eye on all your financial information – in one report.

WHAT AFFECTS YOUR CREDIT SCORE?

Only hard searches can affect your score – these are the credit checks that banks and lenders carry out when you apply for credit.

1. APPLYING FOR CREDIT

Every time you make an application for credit, an enquiry will be carried out on your credit report and a mark will be left on your file.

Making an occasional application for credit won’t make much of a difference to your credit score. However, if you make several applications in a short space of time, or if you’re rejected for credit, it’s likely to have a negative impact on your score.

TIP: Don’t panic if your credit score dips when you’ve applied for a new credit card. If you start using your new product responsibly then your credit score should go back up relatively quickly.

2. THE AGE OF YOUR ACCOUNTS

It’s no surprise to learn that banks and lenders like to know that the people they lend to are reliable and stable, and therefore can be trusted to repay any debts. This is how they manage the risk associated with lending. One way to determine stability is to look at the age of your credit accounts. So, they like to see that at least one of your credit accounts has been held for several years.

This not only proves who you are, but shows you’ve been trusted by another lender over a long period of time. It’s likely to have a positive impact on your credit score if you have an older credit account on there (in good standing, of course). If your credit accounts are all mostly new this could lower your credit score.

3. MISSING OR NOT PAYING YOUR DEBT

If you miss several payments your lender may place your account into ‘default’. Every lender will have different rules for how many payments you’re allowed to miss before you default. Some will allow you to miss up to 6 payments but for some lenders you may only be able to miss 2 payments before you are declared in default.

Defaulting on a payment carries a much heavier penalty on your credit score than missing a payment.

Remember, it’s never too late to pay back a debt. It will always look better on your credit report to pay down a defaulted account – even if the payment is late and it isn’t for the full amount. It will demonstrate to lenders that you’ve tried to make up for the defaulted payment, and this is always preferable to never paying a debt back at all.

WHERE DO YOU FIND YOUR REPORT?

You can check your own score and report on a monthly, weekly or even daily basis if you so please.

By law, you are allowed 1 FREE credit report from each credit bureau, namely:

1. Transunion

2. Experian

3. XDS and

4. Compuscan

I’d encourage you to capitalise on this!

Remember, the best way to have a great score is to pay your accounts on time (as they fall due).

We often hear that people worry about checking their credit report in case it damages their credit score. Know that you can check your credit report as many times as you like, and it will never affect your score.

Can you commit to checking your score today? Yes? Awesome!

Until next time, love and light.
Kim

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