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If you’re working on trying to improve yourself while getting a little bit nervous about your credit score – that’s definitely understandable.
After all, you want to make sure that you aren’t going to fall into any traps when you’re trying to improve your debt or finance a large purchase.
But you want to make sure you’re paying attention to the things that do affect your credit and the things that don’t.
So, we’re going to talk about several different things that you don’t need to worry about when it comes to your credit score, because these things have no impact.
1. Debit Card Payments
Debit cards are great for a lot of people because you don’t have to think about carrying cash, but the money comes immediately out of your account like cash.
Now, you may see a logo on this card for a popular credit card company, but you should know that these payments are not processed the same way and they don’t go onto your credit report.
Because you’re not borrowing money in order to make the purchase the credit card company can’t charge you for that purchase (this isn’t the same as taking money out of an ATM which can be charged).
Since the credit card company isn’t loaning anything they don’t report this to the credit bureau (and they’re not allowed to).
2. Late Payments – Under 30 Days
If you have a late payment that processes less than 30 days past the due date it doesn’t get reported to the credit bureaus.
Now, that doesn’t mean your credit card company can’t charge you. They can and they will.
So, you will have to pay a late fee and possibly increased interest rates, but you won’t have to worry about it affecting your credit report in any way until after that 30 day mark.
3. Checking Your Credit Report
When you check your own credit report through any of those free or paid services you see online you’re performing a ‘soft inquiry.’
A soft inquiry is not allowed to hurt your credit score or even register on your score.
So, if a bank runs your credit they won’t see that you check your score every month or even every week.
However, they are going to pull a ‘hard inquiry.’ If you apply for any type of credit they can run a hard inquiry, which does register on your credit report.
Keep in mind that there are a number of different services that you can use to check your credit score including Credit Karma and Credit Sesame. You can also request free credit reports from the credit bureaus once a year each.
It’s even recommended that you check your report regularly and that you catch any kind of mistakes or problems right away.
Having too many hard inquiries on your credit report might not look great, but the good news is they typically fade away pretty quickly and don’t have a major impact on your score.
What really matters to creditors is how reliably you repay the money you borrow. They’re mainly focused on assessing the level of risk you pose based on your repayment history.
4. Adding Authorized Users
An authorized user is someone who is allowed to use your credit card the exact same way that you do.
They get a card in their own name under your account and they can charge anything they want up to the same credit limit you have.
Now, their credit has no impact on yours, but this is a great way to help someone who needs to build up their credit.
The downside of this is if the authorized user you add abuses the privilege and doesn’t make payments.
Since the card is on your account, you’re the one who’s going to be responsible if that happens. It’s an important step to watch who you add on your card.
5. Your Savings & Bank Balances
Any money that is in your bank accounts right now doesn’t reflect anything on your credit report.
They can’t see your bank balances or investment accounts, no matter if they’re savings, checking or anything else.
Instead, your score is about paying the people you owe. It doesn’t matter how much money you may or may not have stashed away.
If you miss a payment that’s going to show up on your credit report and it could be a big mark on your record.
On the other hand, if you get an overdraft fee on your checking account it doesn’t show up anywhere on your credit report. You just owe money to the bank.
6. Insurance, City and Other Accounts
Do you owe money to your city for utility bills? Or water bills or car insurance?
Any of these that are late are not reported to your credit report.
Now, there is a big caveat to that. That’s because if you’re too late you could end up with a big problem. The company could cancel your service and they could turn the debt that you owe over to a collection agency.
Once that happens you are going to get a mark on your credit report and debt collection is a very big mark.
You want to make sure that you’re avoiding falling into collections by working with these agencies if you’re late.
7. Your Current Income
How much money you make is not allowed to affect your credit score and, in fact, the credit bureau doesn’t even know how much you make.
Your current employment is allowed to be reported but also isn’t allowed to have an impact on your score.
Just keep in mind that you need to apply for credit that you can afford and the company that you apply through may ask for your monthly income or for proof of your income in order to make sure that you can afford it.
8. A Criminal Record
Going to jail does not affect your credit report and can’t count against you on your score.
However, if you have civil judgments those can appear on your score and they will count against you quite a bit.
Civil judgment means that you owe someone money and that’s something that can be reported.
If you have court costs or overdue taxes or child support those things can absolutely be counted on your credit report and they will make a very bad point to your score.
9. Your Spouses Credit
You are not responsible for your spouse's credit in general. That means that whatever credit they have and score they have will not affect yours.
Now, if you open accounts together those accounts will affect both of you equally.
Also, if something happens to your spouse you could become responsible for all of their accounts.
10. Using a Credit Counselor
Working with credit counseling is a great way to help you if you’re struggling with getting out of debt, and you don’t have to worry about it with your credit score.
In fact, credit counseling has nothing to do with your credit score and instead helps you to learn about paying your bills and your debts so that you can improve it.
If you work with a credit counselor who advises you to close accounts, stop making payments, or settle your debts for less than what you owe, these actions could negatively impact your credit score.
It’s important to work with someone who has your best interests in mind and is focused on helping you make progress. In most cases, this will involve setting up repayment plans, which typically won’t hurt your score.
11. Your Age, Gender or Marital Status
Factors like your age, race, creed, gender or marital status are not only not part of your credit score but they are illegal to be counted.
Now, an individual person may be guilty of discriminating against you for any of these things, but your FICO score is legally not allowed to count any of these things as a part of your score, either for or against you. Your credit score is unbiased.
