There are a lot of things that go onto your credit report. A credit report covers all the details of your financial transactions, including your different accounts, history of loan payments, plus other details related to your financial history. A number of things can affect your credit score. However, there are some details that people typically think affect their credit score, but actually they have no effect. Several responsible practices such as paying your rent on time go unrecognized. Many people are not aware of the things that do not impact their credit score.
7 things that have no effect on your credit score
Let us look at some of the things that are left out of a conventional credit report and do not affect your score. Some of the surprising things are:
Your salary, income, or how much money you make is not mentioned on your credit report. Additionally, a high salary does not represent a good credit score, nor does a low salary equate to a bad score. However, your income can indirectly affect your credit score and your access to credit. For example, a credit card issuer will ask your income and then accordingly decide whether you deserve a credit card or not, and what would be your credit limit. A higher income will result in a high credit limit, as then you are more likely to repay your loans and credit cards on time.
- Net worth
It does not matter how much assets you have. Your big mansion, luxury car, outsize savings account, or a huge investment portfolio has no effect on your credit score. It matters, only if you take loans to sponsor your lavish lifestyle and have a dull record of making timely payments.
- Debit card
Your debit or prepaid cards do not affect your credit score in any way. Even cash and checks are not counted, when calculating your credit score. Only your credit card transactions are taken into consideration. Although, some people think that credit and debit cards are the same. However, it is not so, both look similar, but have different functions. A debit card lets you use the money you already own; but with a credit card, you take credit and pay for it afterwards. When you responsibly use your credit card and make payments on time, then only your credit score can improve.
- Paying bills on time
If you pay your rent, or cable/phone/internet bills, and other utility bills on time then it’s a good habit, but it has no effect on your credit score. You are being financially responsible, but none of these things will feature on your credit report. It is when you do not make payments that the unpaid bills are shown on your report.
- Graduation degree
Your credit report does not feature your college degree, no matter how qualified you are. However, you will see your employer’s name on the report, but that too is not counted when calculating your credit score.
- Report checks
Examining or making inquiries on your credit report has no effect on your credit score. A soft inquiry is not counted, when calculating your score. Only hard inquiries, such as when a lender checks or inquires about your report, affect your FICO score.
Goodwill or earning welfare, such as getting government assistance, does not affect your credit score; neither does it show up on your report.
Your credit report is only meant to record how much money you owe and how regularly you repay that money. These 7 things have no effect in determining your credit score.