Does Creditwise Affect Credit Score?
How Does CreditWise Impact The Credit Score?
CreditWise is credit monitoring from Capital One that lets you monitor changes in your credit reports and scores for free. It also offers credit education, notifies you of any unusual activity, and offers advice on how to raise your credit score.
One of the often-asked questions about CreditWise is whether it affects the credit rating in any way. The short answer is no – you don’t get credit just for enrolling and using CreditWise. Here is a detailed explanation of why and how this service is needed.
How CreditWise Works?
To help you track your credit reports and credit scores, CreditWise requires your credit file information. Soft credit check authorization is required when you initially enroll in CreditWise. Soft credit checks refer to credit checks that enable third parties such as CreditWise to review your credit reports.
Soft checks are different from hard inquiries in one essential way: they do not affect your credit rating one way or the other. Every time you apply for a new credit card, auto loan, or mortgage, for example, the credit provider carries out a hard search to determine your suitability. When there are numerous hard inquiries within a short time, the credit scores are affected and may drop.
Indeed, soft inquiries including the CreditWise service will not in any way lower your scores. They enable CreditWise to present your credit data from Experian and offer detailed recommendations with no drawbacks.
Why CreditWise Won’t Affect Your Credit Scores Directly?
There are a few reasons why CreditWise itself does not change your credit scores.
- No new accounts or inquiries: CreditWise does not give you new credit or use hard credit checks to determine your information. Those are the two main ways third parties directly affect scores.
- No reporting payment history: CreditWise cannot also report any payment information to the credit bureaus. Those who report monthly payments such as credit cards, loans, or cell phone bills directly affect your scores positively or negatively depending on your payment behavior.
- Personalized tips, your action required: The recommendations that you receive from CreditWise are merely suggestions. As you know, CreditWise may recommend that you dispute an error, pay off your balances, or consolidate credit cards, for instance, but it cannot do these things for you. The financial advice given cannot in and by itself change your credit score, the changes have to be made by you.
Although CreditWise gives out input, the key thing is that it cannot alter your credit standing or scores in any way – that is within your jurisdiction.
How CreditWise May Help Your Credit Scores But Not Directly?
Therefore, while CreditWise does not affect credit scores in any direct manner, implementing the recommendations provided by the application in one’s financial practices can help to gradually raise credit scores. Here are some examples:
Paying Down Debt If CreditWise signals that you have high credit card balances that are negatively affecting your scores, then paying the balances down as advised in CreditWise can improve the scores eventually.
Disputing Errors If CreditWise alerts you to mistakes on your credit reports that you dispute, correcting those errors can improve the credit.
Improving Financial Habits Unlike similar services, CreditWise offers post-credit education and tracking, allowing users to identify behaviors that affect their scores.
However, CreditWise does not directly affect your credit scores: the report will help you make the right choice and, therefore, positively affect your credit. However, you need to be the one to act on the recommendations made by the said tool, so that you can see your scores improve.
The Takeaway
To sum up, CreditWise does not affect your credit score when you register for the free service offered by this application. Of all the data that the credit reference agency compiles, it makes use of soft credit checks to ensure that it observes your credit data without any deleterious consequences on your credit score. However, when you start working to enhance your credit situation based on the feedback from CreditWise, you will gradually be able to witness an improvement in your credit scores. Thus, it can positively impact only, but conditionally, and only through your initiative, not through the inherent qualities of the service.
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