There are many different things that can harm your credit score. These include such events as making a late payment on a loan or not repaying your credit card on time. However, there are some things that don’t in fact impact your credit score in any way. Here are ten myths that don’t actually affect your credit score.
Getting a Bank Overdraft
Overdrafting on your bank account is usually quite expensive. This is definitely the case if you overdraft multiple bank accounts. However, over-drafting has no impact on your credit score. Just make sure that you clear all of your overdrafts before they are due for collection. Bank overdrafts will in fact impact your credit score if you do not repay it on time, as it will end up being sent to a collection agency. However, this will be due to a debt collection not because of the overdraft.
How Much Money You Make
While your employment information may be listed in your credit report, how much you make is not. Whether or not you have a high or low income, it doesn’t matter, as it will not affect your credit score. For instance, having a high income will not increase your credit score and having a low income will not lower it. Nevertheless, your income could influence the way in which you pay your bills and your payment history does impact your credit score.
Your Insurance Payments
Although insurance companies do check your credit score in order to determine whether you are insurable or not and in order to calculate your premium, your life insurance payments will have no impact on your credit score. This is due to the fact that insurance companies do not report whether your payments were timely or untimely to credit bureaus. Instead of reporting an unpaid insurance bill to a collections agency, insurance companies will typically cancel your policy.
Paying Alimony or Child Support
Alimony payments and child support usually do not affect your credit score unless you do not make your payments on time and your debt is sent to a collection agency. In this case, your credit score will most likely drop by a significant amount. On top of this, you could be sued and arrested for your missed payment.
On Time Cell Phone Payments and Utility
Similar to insurance companies, most cell phone and utility service providers will look at your credit score before they provide you their services. However, neither will give credit bureaus your payment information. This means that your credit score is not increased by timely payments of your cell phone or utility bills. On the other hand, if you neglect to pay your bills then they can be given to a collection agency, which would then report it to your credit bureau.
Paying Your Rent On Time
In many cases, paying rent on time will not help improve your credit score. On the other hand, if you fall behind on your rent payment you could be evicted, which would then negatively impact your credit score as well as your ability to obtain credit cards, rent a home, or take out a loan in the future. However, there is an exception to this rule—if your landlord reports your payments to Experian RentBureau then it can aid increasing your Experian credit score.
Checking Your Credit Score
You can check your credit score or credit report as often as you want and it will not impact your credit score whatsoever. As long as you access your credit report or score through a reputable source such as FICO or the credit bureau then your credit score will not drop a single point. However, if a loan lender checks on your credit score then it will show up on your credit report as a hard inquiry, which would actually harm your credit score the same way that applying for a new line of credit would.
Dealing with a high interest rate on your loans or credit cards will not harm your credit score. Having a low interest rate will also not improve your credit score. However, there is a connection between your interest rates and your credit scores as lenders usually give the best interest rates to those who have good credit score. In this way, your credit history does impact your interest rates, but not the other way around.
It is not true that credit counseling has an impact on your credit score. Nonetheless, it could be put into your credit report. If a credit counselor takes over the management of your credit card payments then you must ensure that your creditor is receiving the payments in a timely manner. Late payments will in fact harm your credit score even if a credit counselor is making them.
How old you are does not have an impact on your credit score, however there can be a correlation between your credit score and age. If you are young then chances are you won’t have very much credit history. On the other hand, the older you are the more likely you have an extensive credit history, which makes prior credit mistakes disappear from your credit report, and in turn will help you obtain a higher credit score. On top of this, having a more extensive credit history can help you obtain additional credit, which would then impact your score.