You would think that checking your own credit score constantly would cause an affect on your credit report, but this isn’t the case. Checking your credit score has no impact on your credit at all. People are often afraid to look at their credit reports or check their scores because they think it might damage their credit.
How your credit score is calculated
By understanding how your credit score is calculated, you can work to improve it even more. So, don’t worry about checking your score – it won’t have any impact on your rating. Instead, focus on making positive changes that will help increase your score overall.
There are two types of credit checks that can be recorded in your credit history:
- Hard enquiries and;
- Soft enquiries
Hard enquiries occur when you apply to borrow money from a bank or similar lender, such as when you apply for a home loan, personal loan, car loan, or a credit card.
Soft enquiries occur when your credit file is accessed outside of applications to borrow money, such as when you check your own credit score or credit report.
Too many hard credit checks in a short period of time can make it look like you’re struggling financially and desperately need access to credit. This, in turn, could lead lenders to reject your future applications for credit products.
But do credit card applications require a credit check?
What is a credit score check?
Credit score checks are simply requests for information, not loan applications. Therefore, checking your credit score should not positively or negatively impact a lender’s decision to approve or deny your future credit applications.
Although a soft check of your credit score may not seem like much, it could be the first step in repairing your damaged credit. By accessing and checking your history for errors, you’re more likely to find cases of identity theft or lender mistakes that you can then work to get cleared up.
What does affect your credit score?
Your credit score in Australia is influenced by several key factors. One of the most important is your repayment history. On-time payments positively impact your score, while late or missed payments can significantly lower it. Additionally, defaults and serious credit infringements, such as bankruptcies or court judgments, can have a major negative effect on your credit score.
The number and type of credit applications you make also play a role. Frequent applications for credit can lower your score, as they may indicate to lenders that you are taking on too much debt. The type and amount of credit you apply for can also impact your score. For example, applications from reputable lenders like banks may be viewed more favorably than those from payday lenders or retail finance providers. Furthermore, making multiple applications in a short period can negatively impact your score.
It’s worth noting that while these factors generally apply across all credit scoring systems, the specific models used by the three main credit reporting bodies in Australia—Equifax, Experian, and Illion—may vary slightly. However, maintaining a good credit history, managing credit applications wisely, and ensuring accuracy in your credit report are key to maintaining a healthy credit score.
