5 Things That Won't Hurt Your Credit Score!

1. 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.

2. 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!

3. 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!

4. 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!

5. 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.

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Sunday, 25 February 2024

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