How Credit Checks Affect Your Credit Score
By Julie Jaggernath
Has anyone ever told you that every time someone checks your credit, your credit score drops? There is some truth to this, but it really depends on who is checking your credit and why. The most important thing to know is that checking your own credit report will never lower your credit score. However, when a lender or creditor checks your credit as part of a credit application, that is a different story.
Hard Inquiries vs. Soft Inquiries: What Is the Difference?
Not all credit checks are created equal. There are two types of credit inquiries: hard inquiries and soft inquiries, and they affect your credit score very differently.
A soft inquiry happens when you check your own credit report, when a company does a background check for employment purposes, or when a potential landlord reviews your credit. Soft inquiries are only visible to you on your credit report and do not affect your credit score in any way.
A hard inquiry occurs when you apply for new credit, such as a credit card, a car loan, a line of credit, or a mortgage. These inquiries show up on your credit report and can be seen by other lenders. Hard inquiries stay on your credit report for up to six years, although their impact on your score fades over time.
Hard vs. Soft Credit Checks in Canada
Why Multiple Credit Applications Can Lower Your Score
Research has shown that people who are actively applying for credit tend to be a higher risk to lenders. The reasoning is straightforward: if someone is seeking a lot of new credit in a short period of time, they may end up owing more than they can comfortably repay. The only way lenders can see this pattern is through the credit inquiries listed on your credit report.
As a result, having several hard inquiries in a short window can lower your credit score. According to how credit scores are calculated in Canada, new credit applications make up about 10% of your overall score. This part of the calculation looks at how many times your credit has been checked in the last three to five years, how many new accounts you have recently opened, and how much time has passed since your last credit application.
That said, most people can apply for credit a few times a year without seeing much of an impact on their score. The effect is generally small, and it lessens over time as those inquiries get older.
The Rate Shopping Exception
There is an important exception to the rule about multiple hard inquiries. When you are shopping for the best rate on a major purchase like a home or a vehicle, it is reasonable to compare offers from several lenders. The credit bureaus recognize this and if multiple inquiries for the same type of credit are made within a short window of a few weeks, they are typically counted as a single inquiry. This means that comparing mortgage rates or auto loan offers will not penalize your score the way that randomly applying for multiple credit cards would.
How Much Does a Credit Check Lower Your Score?
The impact of a single hard inquiry depends on several factors, including the overall strength of your credit history, how much of your available credit you are currently using, and how many inquiries you already have. For most people with a solid credit history, a single hard inquiry has a minor effect. Where it becomes more significant is when there are already other risk factors at play, such as high balances, missed payments, or a relatively young credit file.
The biggest factors in your credit score are your payment history (35%) and how much you owe relative to your credit limits (30%). Keeping these in good shape will always outweigh the minor, temporary dip that comes from a new credit application.
How to Protect Your Credit Score When Applying for Credit
A few simple habits go a long way toward keeping your credit score healthy:
- Only apply for credit when you genuinely need it. Each application triggers a hard inquiry, so avoid applying for multiple products at once.
- Keep your credit balances well below your limits. Using 75% or more of your available credit on an ongoing basis can drag your score down.
- Pay on time, every time. Payment history is the single most important factor in your score.
- Check your own credit report regularly. It is free, it will not affect your score, and it is the best way to catch errors or signs of identity theft. You can get a free copy of your credit report from both Equifax and TransUnion.
Learn more: What Is and Is Not On Your Credit Report
Get Help Understanding Your Credit Report, Debt, and More
Credit checks are a normal part of borrowing, and a little knowledge about how they work goes a long way. Checking your own credit never hurts your score. Shopping around for a major loan within a short time frame is treated as one inquiry. And if you apply for credit only when you need it and use what you have responsibly, the occasional hard inquiry will have very little lasting impact on your overall score. If you have questions about your credit or are feeling overwhelmed by debt, we are here to help. Whether you want to understand your credit report, work on improving your score, or find a path through debt, we would be happy to help you get there.
Last Updated on June 2, 2026
