It's a myth that checking your credit report can hurt your rating. In fact, you need to check your credit as part of good money management. Doing so doesn't lower your credit score because it's considered a soft "pull," or inquiry.

Checking Your Credit

A soft pull typically happens when you check your credit report for errors. It won't be held against you when lenders are deciding whether to let you open a credit card or borrow money. You can get one free report each year from each of the three major credit bureaus by going to AnnualCreditReport.com, a website run by Equifax, Experian and TransUnion.

Keeping Score

Soft pulls only show up on your copy of your credit report, so lenders can't see them and the inquiries won't hurt your credit score. If you check your report frequently, creditors won't see this and wonder whether you are desperately seeking financing.

Snooping by Lenders

Other soft credit checks can occur without your knowledge. These happen when you haven't formally authorized a lender to check your credit for a final loan decision. An unsolicited credit card offer you receive in the mail likely results from a soft pull. Mortgage lenders also typically conduct a soft pull to preapprove a loan. Your existing creditors may do a soft pull to see whether to change your interest rates or increase your credit limit. Some employment background checks may also result in soft pulls.

Dinging Your Score

A hard pull happens when you apply for new credit. In this case, when a lender runs your credit report to make a decision, the inquiry is noted on the copy of the report that other lenders can see. A hard pull usually lowers your credit score by a few points, and multiple hard inquiries in a short period can magnify this. Making a lot of requests for credit at one time can also make lenders leery about letting you borrow money, since it can be a sign of financial problems.