You may know that things like bankruptcies and maxing out your credit cards can have an effect on your credit scores. And you also probably know your credit benefits when you pay your credit card statements on time and limit the number of inquiries made on your credit. You may have even heard that those student loans you have are a factor.
But, beyond that, things get a little hazy. Does every financial decision you make impact your credit? Not necessarily.
“Many consumers wonder why there are differences among their three credit scores,” Nancy Bistritz, director of public relations at Equifax, one of the three main credit bureaus, said. “Generally speaking, credit scores are calculated using data from your credit files” but not every aspect of your life, financial or otherwise, is in those files. Here are some items that won’t affect your credit scores.
1. Your Income
Your employment history can appear on your credit reports, but neither this, nor the income you earn, is going to affect your credit scores. However, your income may affect how you pay your bills, and this is reflected in your credit scores. True, if you apply for some types of credit, like a mortgage, you will be asked for your income and may even have to provide copies of your tax returns or pay stubs to prove what you make. This can influence how big of a loan you can get, but it still does not technically affect your scores.
2. Your Net Worth
Like income, the amount of money in your bank account or other financial holdings does not affect your credit scores, according to Experian. The closest thing related to your net worth that will appear on your credit reports is your mortgage (or any liens you have on your home).
3. Checking Your Own Credit
Every time your credit is pulled, whether for a loan or credit card application, it is documented — and these records are called inquiries. However, there are two types of inquiries: a hard inquiry and soft inquiry. If you’re applying for a new credit card and the issuer reviews your credit, that will create a hard inquiry and ding your score. However, if you are taking a look at your credit reports (which you can do for free once a year by visiting AnnualCreditReport.com), you’ll create a soft inquiry and see no damage to your credit scores.
It’s a good idea to regularly review each of your reports from the three main bureaus — Equifax, Experian and TransUnion — to make sure you know what’s appearing on there. “Because your scores are calculated using the information in your credit files and your credit files may differ across the three credit reporting agencies, there may be differences between scores,” Bistriz said. “That is why it is important to periodically review your credit reports and scores from all three credit reporting agencies to ensure the accuracy of the credit file data.”
Once you’ve seen what’s appearing on your reports, you can keep an eye on your scores to see how your financial behaviors are impacting them. You can see two of your scores for free, updated every 14 days, on Credit.com. (Doing so won’t harm your credit, either.)
4. Your Age
Your birthdate does appear on your credit reports, but your age does not factor into your credit scores, according to Bistritz. However, the age of your accounts does make up 15% of your credit scores.
5. Your Education
Whether or not you graduated college nor the degree you received appears on your credit reports. Of course, some alternate lenders may care about your education and the job that education helped you get as part of their application process, but they won’t find that on your reports.
6. Your Debit Card
Your debit card activity is not reported to the credit bureaus, so just because you’re using plastic at your favorite stores or restaurants doesn’t mean you’re building credit. Checks and cash don’t count, either. The only plastic that’s going to impact your scores is a credit card.
7. Receiving Government Benefits
Whether it’s welfare, disability or Social Security, the fact that you are receiving government assistance is not noted on your credit reports and is not factored into your credit scores, according to Scott Smith, president of CreditRepair.com, a Credit.com affiliate.
8. Your Criminal Record
If you get sent to jail, a notation is not made on your credit reports and your credit scores are not affected, according to Experian. However, that does not mean any legal activity won’t appear — civil judgments can appear on your credit reports, including bankruptcies, tax liens, overdue child support payments and monetary judgments resulting from collection accounts. Any fines or court costs that you don’t pay on time, prompting the bill to get sent to collections (or even turn into a judgment), can also appear on your reports.
9. Marital Status
Your spouse’s name can appear on your credit reports, but whether or not you are married, divorced or single has no effect on your credit scores. It’s also important to note that, if you are married, you and your spouse’s credit is not linked or merged. You each have separate credit reports and scores, according to Experian.
10. Your Location
Your address is on your credit report, but this information is not used in your credit scoring, according to FICO. Where you live can affect your property taxes and insurance rates, but not your credit scores.