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Everyone must have heard a lot about credit history. But are you really aware about the factors and financial aspects that influence it and that actually do not impact your credit score at all? Some of the factors that will have an influence on your credit history include the length of credit, payment history, the amount of debt you owe, new credit and mix of credit accounts.
All money related aspects are not going to affect your credit history and it is important that you understand them clearly. Here in this article we have put together some of the factors related to personal finance that will never have a direct impact on your credit status.
Your Income And Net Worth
On the credit report your employment history does not show up. Regardless of how much your monthly income is, it will never affect your score at all. Whenever you are applying for a loan or a new credit card, you will have to provide the lender or the credit card issuer with complete information related to your monthly income, but in no way it will ever have any influence on your credit score.
Your credit rating will neither go up just because you have money in your bank account, nor will it go down because your monthly income is low.
Debit Card Activity
Unlike credit cards, your debit card activity will never have any impact on your credit score. You can freely use your debit card to make as many purchases as you want or never use it at all. Irrespective of the payment activity, your credit report will never get affected.
Using your debit card to make purchases means you are spending the money that is already available in your bank account. Thus, it is not same as credit card, where you are offered a set credit limit that you need to handle responsibly.
Paying Bills On Time
Paying all your bills on time is your responsibility. So, when you pay your rent, cable bills, rent and other utilities on time, none of it will show up on your credit report. But if by any chance you forget or you are unable to pay any of your bills on time then it is definitely going to affect your credit score.
Any sort of unpaid bills ends up getting reported to collections. So, even after you have paid off the collections, it will still stay on your record for several years. All these will directly hit your credit score. If you are facing such situation, do not be disappointed. Simply keep paying all your bills as per schedule and your credit score will always remain intact.
Alimony, Child Support
Divorce or separation can happen to anyone and one may have to fork up child support as well as alimony. In such situation, your budget is going to undoubtedly suffer. But it will never affect your credit score. But just like unpaid bills, if you fail to pay child support and alimony on time, you are going to be in trouble. Involvement of the collection agency will make your credit score drop significantly.
Receiving Welfare
Just like low income, any government help, collecting welfare, food stamps or disability benefits you receive has nothing to do with your credit status.
Late Or Missed Insurance Payments
Insurance company will check your credit history only to see if they should consider having you as their client or how much they should charge you. But when you miss your insurance payments it will never impact your credit score. When you miss a payment the insurance companies will just drop your coverage. However, do not forget to check with the insurer to ensure they do not report late payments to collections.
Credit Card Interest Rate
Having a credit card with low interest rate is beneficial and it will never affect your credit score in any way. But your credit score is going to affect whether you are approved or not for a certain credit card and it will also influence the interest rate offered to you by the credit issuer.
Marital Status
Being married means sharing financial aspects of your life together with your spouse. However, your husband’s or wife’s credit rating is never going to have any impact on your credit rating, until and unless you have applied for a loan together.
Checking Your Own Credit Score
You are free to check your credit report and it has nothing to do with dropping or rising of your credit score. However, other parties inquiring on your credit report can have a damaging effect.
