Will checking my credit report affect my credit score?

Check your credit score.

Many people are afraid to request a copy of their credit reports but it is crucial for staying on top of your financial game. It’s important to have a good credit score. We understand that asking for your credit report may feel scary. Remember, however, that paying attention to your credit score is a good way to keep track of your credit health.

Things happen so fast that sometimes we don't realise how important it is to keep track of our credit reports, for our own good.

By understanding what's going on in the background, then communicating such things intelligently, you can often take control of your financial well-being and ensure nothing is getting out of hand while preserving your financial reputation.

Soft inquiries on credit scores

Soft inquiries are just another word for authorised requests by companies to access your credit files to check your financial reputation. For example, these inquiries, otherwise known as "soft pulls" are usually done as a routine requirement when applying for a loan or a new credit card.

Hard inquiries on credit scores

Unlike a soft inquiry, hard inquiries do affect your credit score. These are inquiries that a credit provider will conduct to assess whether or not they can approve credit for you. It’s worth checking if this kind of search may have any adverse effects on your credit rating. You can always make sure it doesn't by discussing the possibilities with your bank before anything potentially goes wrong.

Putting on too many hard credit checks in a short period of time, especially when it comes to instalment loans, might make financial institutions think that you are overextending yourself. This could also mean that you are a high-risk customer. It’s therefore important that you don’t put in too many applications so that they don’t get the idea that you will run away with their money.

How long does an inquiry remain on your credit report?

Both soft and hard inquiries are visible on your credit report. Depending on the agency, they can be visible for up to two years.

How often should you check your credit report?

As per South African law, citizens are legally entitled to one free credit report per year from one of the major credit bureaus: TransUnion, Compuscan/Experian, XDS, CPB, and Vericred. Credit Health provides a secure and convenient way to purchase a credit report from any of the major South African credit bureaus.

It is recommended to check your credit report at least twice a year (or as often as you like). To stay on top of debts or financial changes that may occur and could affect your finances such as opening new accounts or transferring debt across various sources, checking your credit score is essential. Sometimes information gets mixed up with other people who have similar names, so checking this early can help save you all kinds of headaches.

How to keep credit records clean?

If your credit score is lower than you'd like, there are a variety of methods to bounce back:

Say No to debt

The first step to repairing your credit report is to not add any additional debt until your credit score improves. Remove yourself from the inquiry trail, by avoiding applications for new credit cards and loans, as this can boost your credit score.

Review your credit report

You can have your credit report free of charge from one of the large credit reporting agencies to check your account status. Start off by paying the bad accounts first with highest interest rates and pay down these accounts as quickly as possible. The sooner you get them paid, the faster you will regain a good credit status.

Make payments on time

The most important thing to remember is to keep making payments and communicate with your creditors. Try to pay off more than the minimum instalment every month and you’ll see your debt getting smaller faster. If your situation is overwhelming, you can talk to a financial expert who can help work through it with you.

Keep old accounts open

Don't close your existing accounts once you've paid them off as it could decrease your credit utilisation ratio and lower your available credit. That could result in losing some points on your credit score. Improving your credit score can take several months, but is a worthwhile goal to have. You'll see results sooner rather than later if you start improving it now.

What to remember when checking your credit report

Every now and again mistakes and technical errors will happen. When checking your credit report, you need to be thorough. You should always check:

• Personal information: Always check that your name, contact details and addresses are up to date.
• Accounts: The accounts that appear on your credit reports should be in line with the ones that you pay for monthly. If there are any unsettling details such as accounts you didn't open or payment activity that might not be yours, dispute them immediately.
• Know what lenders see: If you’re planning to apply for credit, including making a large purchase like a house or car, preparation is important. Checking your credit reports can give you an idea to know exactly what lenders may see when you apply for credit. It may also be helpful to understand hard inquiries and how they work, particularly when it comes down to making large purchases.
• Ensure accounts are reported properly: Checking your credit report is an easy way to keep tabs on what information your lenders and creditors report about you. Even if something goes wrong, or you are unhappy with the service you’ve received from a specific company, having access to this detailed account of transactions can help you build a more effective case. Your credit report includes a full overview of your financial standing and credit history.

Your credit score is important. It can determine if you can get a loan and what interest rates you will pay. If you have judgments or are under debt review your ability to get a job could be negatively affected. This is why it is so important that you check your credit reports regularly.

If you’re worried about checking your credit reports from credit reporting agencies, you’re not alone. Many consumers are afraid that they’ll do something wrong and end up hurting their own credit score. Contact Credit Health for any further inquiries.