5 Things That Don’t Hurt Your Credit Score!
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What is or isn’t in your bank account – Bank account information will never, ever appear on your credit report and therefore can never affect your credit score. Your credit report is a comprehensive list of your debts, not your assets. If you plan on applying for a home loan or a car loan a chunk of change in your bank account can still help even though it won’t help your credit score. Extra money in the bank always looks attractive to lenders; some even consider it a “compensating factor” for a lower than desired credit score.
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How much you make – In the same way your bank account information will never appear on your credit report, neither will your income! This one is a catch-22. Some people believe that having a stable job should help boost their credit scores, but could you imagine if you didn’t have a job? It would become a vicious cycle! No job means you may need to borrow some funds to get by but you wouldn’t be able to use credit because your credit score would drop and so on, so thank goodness it doesn’t affect your score!
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The value of your home or if you even own one – These days there have been many people worrying about the value of their homes since property values have dropped vastly across the board. While a credit report does include the amount you owe on your mortgage versus your original loan amount, the value of your home is not factored in. Great news!
There is also a common misconception that a rented home or apartment will appear on a credit report. This is actually not the case. Landlords currently aren’t required to report your consistency on paying rent to the credit bureaus – for now at least!
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Your job or lack on one – Well, not directly. Though your job history does appear on your credit report (just the name of the employer and an address typically), your job information isn’t relevant to your credit report at all. Job consistency isn’t related to your credit score at all. It is much more common though to see credit scores of those without a job drop because they are unable to pay their bills on time. If you’re able to pay your bills and pay them on time you’ll be good to go!
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If you revolve a balance on your credit cards or pay them off each month – I don’t know where the idea came from but we hear it all the time, “it’s ok to max out a credit card as long as you pay the whole thing off when your bill is due”. We also hear the opposing view just as frequently, “revolving a balance on your credit cards will help boost your score”. Neither is entirely correct! A nice big credit score wants for your credit balances to be at or near 30% of your available credit. Meaning revolving a balance or maxing it out and paying it off is just fine as long as when your balances are reported to the credit bureaus, you show a balance below that magical 30% number.
Why Do I Have Different Credit Scores?
Great question! Every time a credit report is pulled by a company analyzing your ability to repay a loan they request your credit history from not one, but three credit bureaus; Experian, Equifax and TransUnion. Why do we need to have three different credit bureaus you may ask? Well in a way it is for your own protection! Think of it like a checks and balances system, if there were just one bureau they may go mad with power and create ridiculous credit standards, with three I suppose this is less likely.
But back to the original question, the three credit scores may all be slightly different for a few reasons. The most typical reasons being:
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A creditor may take longer to submit your information to the different bureaus than another; likewise each bureau may take slightly longer to update your information than the other.
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Not all creditors report to all three credit bureaus. This is a pain and not too terribly common but it does happen.
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Each bureau weighs your credit information somewhat differently than the others.
Having three different scores isn’t necessarily a bad thing. If there are just a few points between the three you’re probably fine with nothing to worry about. If you have one credit score hanging out there completely different than the other two, you should probably check into why this bureau is showing such a radically different number. This may be a red flag for identity fraud or a mistake on either the creditor or the bureaus part.
We decided to investigate directly to the source. FICO is the leader in credit scoring, essentially in charge of the three credit bureaus collectively. Joanne Gasking, product management director at FICO explained, “If there is a score difference across bureaus for a given consumer, then that score difference is 85-90% driven by data differences in the underlying credit”, meaning they all are likely receiving different data on you. The other 10-15% are likely related to the different scoring models the three different companies use.
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