Your FICO credit score is one of the most dominant three digit numbers in your financial life. Many of you probably know that not paying a mortgage payment or car loan on time will affect your credit score. And you probably also know that maxing out your credit cards and or bankruptcy will lower your score as well. But, beyond the obvious, things may get a little fuzzy. Do you know the financial decisions that do not affect your credit score? You may have even wondered why all three credit scores are different. Not all companies report to all three credit bureaus and not every financial transaction you make is used to calculate a credit score. A credit score uses the data that reports in your credit file.
13 things that do not affect your credit score
- Soft inquiries – A soft inquiry or a soft pull, shows up on your credit report whenever you pull your credit report or score, a business checks your credit report for promotional purposes, or a company you may already have credit with pulls your credit report.
- Late Rent, utility, and cell phone payments – Landlords, utility and cell phone providers do not report your monthly payments to the credit bureaus. However, if at any point you terminate the contract and leave an outstanding balance and the account goes to collections these providers most likely will report to the credit reporting agencies.
- Mortgage loan rate shopping – We all want the best interest rate when shopping for a home mortgage, in order to find the best rate we may have to have several loan officers review your credit profile. This generates several hard inquiries, but FICO has a particular formula that ignores home loan inquiries over a 30- day period. FICO uses a particular method that when searching your report if they find mortgage loan inquiries with in a 30-day period, they will count as one.
- Disputing a charge or error on your credit report – Incorrect information is often reporting on your credit report, individuals are allowed to dispute inaccurate information. Disputing this information will not affect your credit score.
- Overdrawing your checking account – Checking account information is not reported on your credit report.
- Being denied a credit card – If you have recently applied for a credit card or loan and denied, the denial will not be on your credit report. However, the request will result in a hard inquiry showing on your credit report.
- Losing a job – Job status is not a factor in your credit score, but lack of income may affect the approval of a loan or credit card.
- Not paying back a family member or friend – Individuals are not allowed to report to the credit bureaus.
- Receiving government assistance – Receiving food stamps or any other government assistance has no bearing on your credit and will not be reported.
- Your debit card – The activity from a debit or prepaid card does not report on your credit report, therefore doesn’t affect your credit score.
- Net Worth – The amount of money you have in savings, the lavish house you live in or a fancy sports car will not affect
- A degree or lack of a degree – It doesn’t matter if you attended an ivy league college or never even graduated from high school.
- Paying your taxes on time – Paying your taxes a few months late won’t immediately result in credit damage, however, once the IRS reports you for delinquent taxes and a tax lien is issued that’s when the trouble starts.
Your credit score is used to give potential lenders a look into your financial history; this allows them to determine the amount of risk you will be as a borrower. This being the reason your credit file only contains information about your financial track record, and how well you have paid any outstanding loans.