Hard Checks Have No Impact On Credit Scores: Experian India MD

Experian India MD sheds light on factors affecting credit scores. He also busts a myth of hard checks impacting credit scores.
Hard Checks Have No Impact On Credit Scores: Experian India MD

Credit Reporting company Experian India Managing Director Manish Jain on June 26, 2024, said that hard checks of financial institutions on a customer's credit score will not impact the score.

“We have to bust this myth of credit inquiries having an impact on scores. There used to be such an impact in the past. However, now the bureaus do not and should not use inquiry information to calculate your score”, Jain said in an interview conducted by credit platform Bankbazaar.com.

The credit score is an indicator that allows financial institutions to assess the creditworthiness of an individual. A hard credit check or credit pull means a bank or any financial institution pulling credit scores from a bureau when it is considering a credit application of a customer.  Jain pointed out that information on credit score pulls is not used to calculate credit scores because customers initiate multiple credit pulls on themselves.

According to Jain, they even use different contact numbers on various payment apps to check their credit score as they have many contact numbers. This behaviour by individuals may create the impression of multiple credit score checks, although these inquiries are from the same person, merely out of curiosity and not intended to deceive.

Jain highlighted that credit scores may vary across bureaus due to the different algorithms used by each bureau.

The change in technology, innovation, and customer demands over the last two decades,  have changed how credit scores are calculated, Manish said. He also shed light on the factors affecting credit scores.

Factors Affecting Your Credit Score

However, if you do not update your phone number or address when you use a new phone connection or if you have moved to a new house, such behaviour can have a minor impact on your credit report, Manish says.

When you are refinancing your loan, make sure that the bank closes your previous loan and has sent the updated report to the credit information institution, Manish suggests. Otherwise, on the credit information system, two loans will be recorded on your behalf impacting your credit score.

Jain also pointed out how a bureau looks at credit utilization to calculate your credit score. An individual having three credit cards and using 80 per cent of the limit on all three, indicates a riskier behaviour vis-a-vis someone using 80 per cent on one card and barely using the other two. The credit bureau only checks the total utilization across all cards and if it remains at a low level, for instance, 30 per cent of the individual's overall credit limit, he may get a good credit score.

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