6 Factors That Have No Impact On Your Credit Score

People under some kind of debt or those who are willing to receive a debt may find themselves in strained situations every time they think about their credit score. Sometimes, the situation may become so stressful that they start doubting each of their personal finance activities for fear that they may badly affect their credit score.

This blog is to clear away all your doubts related to your personal finance activities and their effects on your credit score.

Here's a list of the things that don't affect your credit score:

1. Bank Overdrafts: A bank overdraft doesn't affect your credit score if you clear them in time. However, if you don't pay it back and your account remains overdrawn for several weeks, your bank may decide to send the debt to collection agency. If sent, it will appear on your credit report (for 7 years) and severely hit your credit score. Remember, this hit in the credit score will be due to the debt that stemmed out of the overdraft account, not the overdraft itself.

2. Inquiring About Your Credit Reports: You can check your own credit reports as many times as you wish (but from a reputable source like the Annualcreditreport.com, the credit bureaus, FICO, or a legitimate third party), and your credit score won't drop a point. You can also allow your employer to check your credit report before they give you the job, it also won’t affect your credit score.

   These types of inquiries are considered to be soft inquiries (inquiries that have nothing to do with applying for credits), which aren't just left out of your credit score, but also not included in the credit reports that lenders see when they order your report.

   Related Article: 10 Easy Ways to Repair Your Credit Score

3. Interest Rate That You Pay: The interest rate that you pay on your credit card isn't a factor to be reported to the credit reporting agencies (Equifax, Experian, and TransUnion) by the credit card issuer for deciding on your credit score. However, there may be a correlation between credit scores and interest rates since lenders might allow a lower interest rate if you have a higher credit score, and vice versa.

4. Using Credit Counseling: People worried about overdue bills and debt collectors and not knowing how to develop a good budget consider using a credit counselor for advice and help. Data about counseling will be visible in your credit report however, they won't hurt your credit score. Just make sure that the payment is done timely to the creditors when your credit card payments are being done by the counselors because failing to pay on time to your creditors will negatively affect your credit score.

5. Your Debit Card: Because your debit card is also plastic money and it looks like your credit card, it doesn't mean that it builds or lowers your credit score every time you use it for any purchase. Checks and cash activities are also not reported to the credit bureaus. That's because you are using money you already have. The only plastic card that impacts your credit score is your credit card.

6. Your Age, Income, Marital Status, Location, etc.: Your date of birth, your living address, employment history, information about your employer may be listed on your credit report, but certainly have no impact on your credit score. However, they may have an indirect impact on your credit score, which are:

   • If you're young and there are chances that you don't have much experience with credit, it could then limit your credit score.

   • If you have sufficient income to always pay your credit cards bill and loans on time, you're actually helping your credit score.

   Your location, marital status, sex, religion, occupation, title, employer, or your employment history certainly aren’t factors to impact your credit score.

   Also, the government benefits such as a welfare, disability, or Social Security, which you may be receiving are not noted on your credit reports and aren't factored into your credit scores.

   Related Article: 6 Benefits You Can Enjoy With A Good Credit Score

This must have given you a clear idea about what you should and what you shouldn't worry about when it's about your credit score. So far you are good with the pay back of your credit card or other kinds of debt, there's no point worrying about your credit score.