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People often hear that a credit check can lower their FICO score, a credit score derived by Fair, Isaac and Company. While true, credit checks are unlikely to do any significant damage, and there are ways to protect your credit rating.
The Considerations
Credit checks can lower your credit score, but it depends on the timing and who and why someone checks your reports, according to MyFico.com.
Types
Generally, only credit checks for a new loan affect a credit score, reports Privacy Rights. Checking your own score, "pre-approved" credit lines and employment screens do not affect a FICO score.
Expert Insight
Applying for multiple applications for different lines of credit looks like you are having financial troubles. Multiple checks for a single type of credit appears as looking for a good deal, the sign of a responsible borrower, reports MyFICO. Several credit checks in a short time span for an auto, mortgage or education loan only negligibly affect your score
Misconceptions
The opposite of applying for new credit, that is, closing a credit line, can actually hurt you because it shortens your credit history, reports Privacy Rights.
Effects
Even credit inquiries that lower your credit score only take off no more than five points per inquiry, reports MyFICO. Five points does not affect you all that much; it is better to pay bills on time. If you wish to maximize your FICO score, perform all credit applications within 30 days.
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