Getting your free annual report will not hurt your credit scores

Dear JPA,

Your credit card provider is incorrect. Getting your annual credit report through www.annualcreditreport.com does not affect credit scores.

Neither does getting your credit report through a credit monitoring service, such as Experian’s Triple Advantage, or getting your personal report directly from Experian when you have had adverse action taken, such as being declined for credit, if you are a fraud victim, or if you have already received your free report and want to purchase another personal credit report.

The misunderstanding is likely caused by confusion about inquiries. Most people do not understand that there are two types: inquiries shown to lenders when you apply for credit and inquiries that appear only on your personal credit report.

An inquiry is simply a record that your credit report has been accessed. Your personal credit report provides you with a complete list of every inquiry of any type.

Lenders only receive inquiries that are the result of you applying for credit or services that affect your finances. Those inquiries can represent new debt that doesn’t yet appear on your credit report as an account.

Those inquiries represent lending risk because the lender does not know how much that new debt might be. For that reason, those inquiries can have some impact on credit scores.

That impact is typically quite small. If you have a very good credit history, they may not affect your credit scores at all. On the other hand, if you are having problems that make you a marginal credit risk, the inquiries might cause a small change in your credit scores. But, that could be enough to cause you to be declined or pay a higher interest rate if you already are a borderline risk.

Only you see inquires for other purposes. Those purposes include getting your own credit report directly from the national credit reporting companies, account monitoring by your existing lenders, preapproved credit offers, employment inquiries and insurance inquiries.

Your personal report from Experian lists the inquiries in two sections. One section is labeled “inquiries shown to others” and the other section is labeled “inquiries shown only to you.”

Everyone should get their credit report once a year. It is free and doing so won’t hurt your credit scores. If anyone tells you that doing so will hurt credit scores, they have been misinformed.

Thanks for asking.