What to Know When Pulling Your Credit

Understanding and utilizing your credit appropriately is a key skill in effectively managing your finances. The state of your credit can help or hinder your progress toward any financial goals you set. So, what should you know when pulling your credit? Read on to find out what to keep top of mind.

Hard Inquiry vs. Soft Inquiry

Before you pull your credit, you’ll need to understand the difference between a hard and soft inquiry.  When you apply for a loan, credit card, or other form of credit, a potential lender does a hard inquiry to check your credit. This counts as an inquiry that will impact your credit score. There are also “soft inquiries” that include instances such as monitoring your own credit. These do not impact your credit score and are only visible to you on your credit report.

Frequency

Everyone is entitled to one free copy of their credit report once per year by each of the three credit reporting agencies. You may choose to pull all three credit reports at once so you can compare the information in each report. You can also choose to pull them at different times throughout the year. This will allow you to see any changes in your credit report throughout the year and continue to make sure the information contained in your report is accurate.

Note that, currently, this has been increased to once a week due to the ongoing financial impact of the COVID-19 pandemic.

What to Look For

Once you pull your credit report, you’ll be presented with a lot of information. When reviewing your report, you should first make sure all the information is accurate, including your personal information, trade lines, and public records. If you notice any missed payments but you know you’ve paid the bill on time, contact the company to have these items corrected. If you notice any credit items that don’t belong to you, they may be fraudulent accounts. To have this corrected, you’ll need to contact the credit bureau directly and file a claim. Fraudulent accounts can have a negative impact on your report and may be a sign of identity theft, so you’ll want to take quick action to have them removed.

Keep Your Information Safe

Unfortunately, identity thieves are everywhere so you’ll need to take steps to keep your information safe. When accessing your credit report, be sure to use www.AnnualCreditReport.com as this is the only website authorized by the federal government to provide you your credit report for free. Other websites may be able to obtain your credit report, but you’ll need to provide significant personal information, and some may ask for a credit card. Be cautious when using third-party websites to be sure your data isn’t compromised.

Your Credit Score Isn’t Included

While your credit report contains a record of your financial history, it won’t include your credit score. Your score is a three-digit number that is calculated from the information in your credit report and is often used by lenders to determine if they will loan you money or approve a line of credit. If you’re a PSECU member, you can access your score by using PSECU’s free credit score service*.

What Impacts Your Credit Health?

Your credit score is generally calculated based on five components: payment history, amount owed, length of credit history, credit mix, and new credit. Most negative items on your credit report may stay there for up to seven years (some bankruptcies can stay for up to 10), which can limit the amount of new credit you can obtain, like mortgages, auto loans, or credit cards. By being diligent and pulling your credit report regularly, you can make sure all information is accurate and that no negative items pop up unexpectedly.

The most important thing to remember is that what you do today will impact your credit health both now and in the future. Based on your financial choices, it will become easier or harder for you to reach your future goals, which is why it’s so important to monitor your credit and make sure your credit history is accurate. For more money management tips and tools, visit our WalletWorks page.

*PSECU is not a credit reporting agency. Members must have PSECU checking or a PSECU loan to be eligible for this service. Joint owners are not eligible.