What Does Not Affect Your Credit Score?

 

A credit score is a numerical representation of a person’s creditworthiness based on their credit history. It is a three-digit number that ranges from 300 to 850, with higher scores indicating better creditworthiness. Credit scores are calculated using a variety of factors, including payment history, credit utilization, length of credit history, types of credit accounts, and recent credit inquiries.

Lenders, like banks and credit card companies, use credit scores to determine whether to approve or deny credit applications and to set the interest rate and other terms of the credit. A higher credit score can increase the likelihood of being approved for credit and may result in more favorable terms, like lower interest rates and higher credit limits.

Things that do not affect credit scores

1. Your age

Age discrimination in credit is illegal under the Equal Credit Opportunity Act (ECOA), which prohibits creditors from discriminating against applicants on the basis of age, among other factors. However, age could have an indirect impact because of the length of your credit history. For example, younger people may have shorter credit histories, which can make it more difficult for them to establish a strong credit score. Additionally, younger people may have lower income levels, which can make it harder to manage debt and make timely payments, which can negatively impact their credit scores.

2. Your income

Your income does not directly impact your credit score. Credit scores are calculated based on your credit history and how you have managed your credit accounts in the past. However, your income can impact your ability to pay your bills on time or your credit utilization ratio. Although it doesn’t impact your score, your income may be used by lenders when making credit decisions, like determining your credit limit or interest rate.

Learn more: Does Income Affect Credit Score?

3. Marital status

Your marital status does not directly impact your credit score. If you have joint accounts with your spouse, their credit behavior can affect your credit score. For example, if your spouse has a history of missed payments or high credit utilization, it could negatively impact your joint credit score. It’s important to keep in mind that joint accounts can have an impact on both individuals’ credit scores, regardless of their marital status.

Related: Marriage and Credit Score

4. Bank overdrafts

Overdrafts occur when you spend more money than you have available in your bank account, resulting in a negative balance. If you have overdraft protection, the bank may cover the negative balance by lending you money, and you will be required to pay interest on the amount borrowed.

While overdrafts themselves are not reported to credit bureaus, if you do not repay the overdraft balance in a timely manner, the bank may eventually send the account to a collections agency. Once the account is sent to collections, the collections agency may report the delinquent account to the credit bureaus, which can negatively impact your credit score.

Learn more: Does a Bank Overdraft Affect Credit Score?

5. Insurance payments

Insurance payments generally do not impact your credit score. Insurance companies typically do not report payment information to credit bureaus unless you fail to pay your premiums and your account is sent to collections.

6. Child support and alimony

In general, child support and alimony payments do not directly impact your credit score, as they are not reported to the credit bureaus. However, if you fall behind on these payments and the delinquency is reported to the credit bureaus, it can negatively affect your credit score.

For example, if you miss a child support payment and the custodial parent reports it to a collection agency, the delinquency could be reported to the credit bureaus as a collection account, which can significantly lower your credit score. Similarly, if you fall behind on alimony payments and the court issues a judgment against you, the judgment can be reported to the credit bureaus as a public record, which can also lower your credit score.

Learn more: Does Child Support Affect Your Credit?

7. Utility and phone payments

Utility and phone payments may impact your credit score, but only if they are reported to the credit bureaus. Generally, utility and phone companies do not report payment history to credit bureaus unless you are late on your payments or your account is sent to a collections agency.

Some credit scoring models, like FICO Score 9 and VantageScore 4.0, include utility and phone payments in their calculations if they are reported to the credit bureaus. This means that positive payment history could potentially help improve your credit score, while late or missed payments could hurt it.

It’s a good idea to check with your utility and phone companies to see if they report payment history to the credit bureaus and to monitor your credit report regularly to ensure accuracy.

Related: Do Utility Bills Build Credit?

8. Rent paid

Rent payments typically do not directly impact your credit score unless you have signed up for a rent-reporting service. Rent reporting services allow landlords to report rent payments to credit bureaus, which can then be factored into your credit score calculation. However, not all credit bureaus or lenders consider rent payments in their credit scoring models. That being said, like some of the other things on this list, if you fail to pay your rent and your landlord sends your account to a collection agency, that could negatively impact your credit score.

9. Checking your credit score

Checking your own credit score does not impact your credit score. This is known as a “soft inquiry” or “soft pull,” and it does not have any effect on your credit score.

There are two types of inquiries that can be made on your credit report: “hard inquiries” and “soft inquiries”. Hard inquiries occur when a lender or creditor checks your credit report as part of the application process for credit. Hard inquiries can have a negative impact on your credit score, as they may indicate that you are actively seeking credit and may be at a higher credit risk.

Soft inquiries, on the other hand, are inquiries that are not related to a credit application, like when you check your own credit score or when a lender checks your credit report as part of a pre-approved credit offer. Soft inquiries do not affect your credit score in any way.

So, you can check your credit score as often as you like without worrying about it negatively affecting your credit score.

Learn more: Does Checking Your Credit Score Lower It?

10. Credit counseling

Credit counseling itself does not directly impact your credit score. However, enrolling in a credit counseling program may indirectly affect your credit score in some ways.

When you enroll in credit counseling, your credit counselor may negotiate with your creditors to lower your interest rates and monthly payments. This can help you pay off your debts faster and more easily, which can have a positive effect on your credit score over time. However, initially, when you enroll in a credit counseling program, your credit report may reflect that you are participating in a debt management program, which could be seen as a negative by some lenders and may temporarily impact your credit score.

Additionally, if you have missed payments or defaulted on your debts, enrolling in credit counseling will not erase these negative marks from your credit report. However, if you consistently make payments on time while in the credit counseling program, this can help rebuild your credit score over time.

Learn more: Does Credit Counseling Hurt Your Credit?

11. Being denied for credit

Being denied for credit does not directly impact your credit score. When a lender considers your application for credit, they may perform what is called a “hard inquiry” on your credit report, which can slightly lower your credit score. However, if you are denied credit, it does not necessarily mean that a hard inquiry was performed.

That being said, if you are repeatedly denied credit, it can indirectly impact your credit score by signaling to potential lenders that you may be at a higher credit risk. This is because every time you apply for credit, it generates a hard inquiry on your credit report, which can remain on your credit report for up to two years. Multiple hard inquiries in a short period of time can make you look desperate for credit, which could negatively impact your credit score.

Additionally, being denied credit could be a signal that there are issues with your credit history or credit report that need to be addressed. If this is the case, it’s important to take steps to improve your credit before applying for credit again.

12. Debit cards

Debit cards do not impact your credit score. Unlike credit cards, which involve borrowing money and making payments on credit, debit cards are linked directly to your checking account and are used to make purchases using the funds you have in your account.

Since there is no borrowing or credit involved in debit card transactions, they are not reported to the credit bureaus and therefore do not affect your credit score. Using a debit card responsibly by keeping a positive balance and avoiding overdraft fees can help you maintain good financial habits, which may indirectly impact your creditworthiness over time.

13. Library or traffic fines

Library fines typically do not impact your credit score, as they are not considered a debt owed to a creditor. However, if library fines are turned over to a collection agency, and the collection agency reports the debt to the credit bureaus, it could potentially impact your credit score.

Traffic fines also do not typically impact your credit score, as they are not considered a type of credit. However, if you fail to pay a traffic fine and it goes into collections, it could potentially appear on your credit report and negatively impact your credit score.

14. Upgrading or downgrading your credit card

Overall, upgrading or downgrading your credit card is unlikely to have a significant impact on your credit score, and any effect is likely to be temporary. However, it’s important to keep in mind that opening or closing credit accounts can have a more significant impact on your credit score, so it’s best to evaluate your options carefully before making any changes.

15. Paying someone else’s bills

Paying someone else’s bills typically does not impact your credit score, as credit reporting agencies typically only consider credit accounts in your name when calculating your credit score. However, if you co-sign for a loan or credit account for someone else, you may be held responsible for any missed payments, and those late payments could negatively impact your credit score. Additionally, if you are an authorized user on someone else’s credit account, like a credit card, the activity on that account may show up on your credit report, but the impact on your credit score may be minimal or non-existent, depending on the specifics of the account and your overall credit history.

What are the factors that actually affect your credit?

Several factors can affect your credit score, including:

• Payment history: Your payment history is one of the most important factors in determining your credit score. Late payments, missed payments, or defaults can have a negative impact on your credit score.
• Credit utilization: Credit utilization refers to the amount of credit you are using relative to your credit limit. High credit utilization can indicate a higher risk to lenders and can negatively impact your credit score.
• Length of credit history: The length of your credit history is also an important factor. A longer credit history can demonstrate that you have a proven track record of responsible credit use.
• Types of credit: Having a mix of credit accounts, like credit cards, loans, and a mortgage, can show that you can handle different types of credit responsibly.
• Recent credit inquiries: Too many recent credit inquiries can indicate that you are seeking credit from multiple sources and may be a higher risk to lenders.
• Public records: Negative public records, like bankruptcies, foreclosures, or tax liens, can have a significant negative impact on your credit score.

Related: How is Your Credit Score Calculated?

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