9 Things That Can’t Hurt Your Credit Scores
You might be surprised to find out what factors can’t hurt (or help) your credit scores—so stop worrying about them!
If you’re like most people, you want squeaky clean credit so you can borrow money at low interest rates and pay less for insurance and security deposits. While it’s important to focus on factors that raise your credit scores, it’s also important to know what has absolutely no affect on them, so you don’t sweat the small stuff.
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Here are 9 factors that can’t hurt (or help) your credit scores:
Factor #1: Your Personal Information
Personal information—like your name, current and previous addresses, Social Security number, and birth date—is included on your credit report with each of the 3 nationwide credit reporting agencies (Equifax, Experian, and TransUnion). However, none of it has any bearing on your credit scores.
Instead, the information that’s used to calculate your credit scores includes:
- account information, like payment activity on your loans and credit cards
- public information, like a recorded tax lien or bankruptcy
- inquiries from lenders in response to your application for new credit
That means your marital status, gender, race, education level, and age are not used in any way to determine your credit rating.
Factor #2: Changes to Your Income
You may be surprised to know that your income isn’t included on your credit report and therefore earning less has no negative effect on your credit scores—as long as you continue to pay your bills on time. Of course, losing your job or business could severely affect your ability to do that. Even receiving unemployment or another type of public assistance will not hurt your credit scores.
Creditors generally get your income information from an application you submit. So, making less money could be a stumbling block to getting new credit because in addition to your credit score, your income, expenses, and job stability are taken into consideration by a lender.
Factor #3: Using a Debit Card
Debit and credit cards look alike—but that’s where the similarity ends. Your bank activity isn’t listed on your credit report. So while using a debit card or a prepaid debit card is convenient for making everyday purchases, it won’t help you build credit.
Factor #4: Getting Turned Down for Credit
If you’ve been turned down for credit, you may be worried that this can hurt your credit scores. Don’t. Your credit report doesn’t show whether an application for a loan or credit card was approved or declined. So, it may hurt your feelings but it definitely won’t hurt your credit scores.
Factor #5: Paying Small Merchants
Bills you pay to small companies or individuals for local services—like lawn care, pest control, or rent—typically don’t show up on your credit report. The 3 nationwide credit bureaus have strict requirements about who can report consumer information to them, and in many cases it’s just not feasible for small businesses.
If a merchant doesn’t report payment information to the credit bureaus, then your payment history with that company can’t affect your credit scores. However, if you don’t pay up and they turn your account over to a collection agency, that’s another story! Collection companies typically report information to the credit bureaus on accounts they acquire.
The best way to find out which companies report information to your credit report is to get a free copy of it at annualcreditreport.com.
Factor #6: Paying Someone Else’s Bill
If you want to do a family member or friend a favor by paying their bills, do it from the kindness of your heart and not because you think it will boost your credit. Regardless of who pays a bill, it only gets reported on the credit file of the person who owns the debt.
Factor #7: Adding an Authorized User
Adding someone to your credit card as an authorized user allows them to get a card in their name and to make charges up to the credit limit that you allow. An authorized user simply rides your credit coattails and has no legal responsibility to repay the debt. Their credit situation can’t affect yours in any way—but you can help them build credit.
However, your credit scores could crash and burn if an authorized user abuses a credit card and you can’t afford to make the minimum monthly payments. So always be cautious about adding anyone to your credit cards.
Factor #8: Going Loan Shopping
Applying for new credit results in a “hard inquiry” on your credit report and it temporarily dings your credit. That’s because credit inquiries are a signal that you may be taking on new debt, which represents potential risk for creditors and merchants.
However, most credit scoring models are sophisticated enough to recognize when you’re shopping around for the best interest rates. So don’t hesitate to get multiple offers for an auto loan or a mortgage refinance. Credit scores may ignore multiple inquiries or simply count them as one inquiry if they occur within a specific timeframe, such as 2 or 3 weeks.
Factor #9: Checking Your Own Credit
Many people are skittish about getting their free credit report because they mistakenly think it’ll count against them. Pulling your own credit report is called a “soft inquiry” and it never hurts your credit scores, no matter how often you request it.
Learn more about how to check your credit report and get errors corrected in the Credit Score Survival Kit. It’s a free multimedia resource that also shows you how to build your credit and get your free credit score as often as you want with no strings attached.
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About the Author
Laura Adams received an MBA from the University of Florida. She’s an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura’s previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.
