5 Misconceptions About Credit Report Checks

Did you know your credit report updates an average of one time per month? Do you check it regularly? Whether you realize it or not, your credit report plays a huge role in your financial health – think of loan eligibility, credit cards, or even renting a house. Read on to check out five common misconceptions about a credit report check, so you can better understand how these numbers work and how to leverage them to your advantage.

Misconception 1: Only lenders will check your credit report

Even if you’re not planning on borrowing any money in the new future, you still need to care about your credit score. Landlords, employers, insurance companies, and even some utility companies may check your credit report. They can use information for the following:

• Landlords – Credit reports help landlords predict whether a tenant will pay rent on time and maintain the property responsibly.
• Employers – Some employers may check credit reports to assess financial responsibility and character for certain positions, but laws vary by state regarding employer credit checks.
• Insurance Companies – Insurers argue that credit history can correlate with certain behaviors, like riskiness.
• Utility Companies – Some utilities may use credit reports to determine deposit amounts, though it’s not as common as other instances.

Misconception 2: Checking your own credit report brings your score down

The truth is that checking your own credit report through authorized channels, like AnnualCreditReport.com, does not negatively impact your credit score because it is not an inquiry about new credit. By regularly reviewing your credit report, you can find ways to improve your finances and catch any potential errors in the report to dispute.

Misconception 3: A hard inquiry will always negatively impact your score

Whereas hard inquiries can slightly lower your credit score, their impact is generally minimal and temporary. That being said, multiple inquiries within a short period about different loans may have a slightly greater impact. Usually, multiple inquiries about the same type of loan are called “rate shopping,” and FICO counts all hard inquiries made within a window of two weeks as one inquiry. That means your score only receives one small decrease instead of multiple.

Misconception 4: Only negative information appears on your credit report

It seems like negative information impacts your credit report more than positive information does, but that’s not the case always. A credit report is your financial story, and it details the ups and downs of your financial life. That means that positive credit information, such as on-time payments and low credit utilization, is also included on your credit report – and over time, it can make a big difference. The more positive information you have on your credit report, the more likely you’ll be to compile tell a strong, well-rounded credit story with just a few minor setbacks.

Misconception 5: You Can Only Check Your Credit Report Once a Year

While it might seem like you can only check your report once a year, that’s a misunderstanding. In reality, you can check your credit report for free from each of the three major credit bureaus (Equifax, Experian, and TransUnion) once per year through AnnualCreditReport.com. That’s three reports you can space out if you want – or you can check all three bureaus at the same time.

Additionally, you can check your credit report as much as you want with a credit monitoring service like MyFICO®. These services do more than just a simple credit check – they can provide identity restoration in case of emergency, give you detailed breakdowns of auto or mortgage scores, and give you updates every single month.

Disclaimer: This content is sponsored by MyFICO® and is provided for informational purposes only. The information shared here is not intended to serve as financial, legal, or credit-related advice. Readers are encouraged to consult with their personal financial advisors or credit professionals to assess their specific situation. To learn more about MyFICO®’s services, including credit scores and monitoring tools, please visit the MyFICO® website or reach out to a MyFICO® representative.

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