As a capable adult, you’d like to think you know what affects your credit score, right?
Yet a survey released last year by the Consumer Federation of America and VantageScore Solutions showed that while the majority of respondents understood the basics of credit scores, many did not understand credit score details with important cost implications.
And some of those details are pretty important. For example, the survey found that only 22 percent of people knew how much a low credit score could cost them. This is concerning since a low credit score, according to the survey, “Typically increases the cost of a $20,000, 60-month auto loan by more than $5,000.”
Therefore, if you find yourself unsure of what those details are – or hear a lot of conflicting information – listen up. Here are 10 things that in fact do not affect your credit score.
10 things that don’t affect your credit score
1. How much money you make
While income is a relevant data point for lenders reviewing an application for credit, it’s not a data point that can influence your credit score. After all, it’s not a reflection of your credit behavior.
Let’s put to rest the idea that earning a high income results in a good credit score and a low income results in a low credit score. How you use your credit is ultimately what affects your credit score – not how much money you make.
2. Where you make your money
Similar to your income, where you earn your money does not affect your credit score. That means your credit is not affected by your day job, your side hustles, or your passive income.
3. Your assets
So far we’ve talked about how your pay and employer don’t impact your credit score. The same goes with your assets.
In short, the income you have coming in, whether it’s from your job, an inheritance, or assets, does nothing to influence your credit score.
However, you may be asked to provide information about your assets when you apply for credit with some lenders.
4. How you spend your cash
Have you noticed a lot of advice on credit scores telling you to get a credit card? That’s because your credit isn’t tracked if you don’t have any to speak of.
So while you could be a total money master, it won’t make a difference to your credit score if you’re only using cash. Whether you’re a pro at managing cash or letting it burn a hole in your pocket, your behaviors with it are not factors that affect your credit score.
5. Your debit card
The relationship between debit and credit cards can be confusing, especially since debit cards offer an option to choose “credit” at the point of purchase. But let’s be clear, your debit card is basically the equivalent of using cash.
Even if you choose “credit” at the swipe, your debit card is eventually pulling money from your bank account. The difference between choosing “debit” or “credit” on a debit card is simply a difference in who processes the transaction and when that money is pulled out of your account.
Since debit cards use your cash and don’t give you access to a line of credit, they are not factors that affect your credit score.
6. Where you live
Your place of residence does not influence your credit score, but this is information you’ll likely have to give a creditor when applying for new credit.
7. Your demographics
Here’s a biggie: your race, color, religion, heritage, gender, and marital status are not factors that can affect your credit score.
According to MyFico, laws mandate that this information is not factored in:
“US law prohibits credit scoring from considering these facts, as well as any receipt of public assistance, or the exercise of any consumer right under the Consumer Credit Protection Act.”
8. Government assistance
If you receive public benefits such as welfare or food stamps, or if you live in public housing, these are not factors that can affect your credit score.
9. Non-credit-based financial obligations
Insurance payments, taxes, child support, and alimony – these are all financial obligations but they aren’t the same as credit being lent to you. Therefore, these are not factors that affect your credit score.
However, if you fail to meet these obligations and that leads to a judgment against you or an account sent to collections, then your credit score is affected. Judgments and collections are things that can stay on your credit report for years.
Therefore, you really don’t want to let your financial obligations slide, whether they’re credit-based or not.
10. Soft credit inquiries
Remember, not all credit inquiries affect your score.
Hard credit inquiries, which are the result of submitting an application for credit, appear on your credit score. Soft credit inquiries, which are the result of lenders preliminarily reviewing you as a candidate for credit (with or without your knowledge) do not affect your credit score.
Soft credit inquiries can also happen if you check your own credit score or credit report. Since this is an act of simply reviewing your information without applying for new credit, your credit score will never take a hit for it.
A credit score only reflects how you use credit
As you think about the factors that can affect your credit score, remember that your credit score is not a reflection of your full financial picture. It’s a reflection of how well you manage the money you borrow on credit.
If you fear that every financial step you take will hurt your score, rest easy. The factors that affect your credit score are essentially things like your payment history, your credit utilization, the age of your accounts, your credit mix, and hard credit inquiries. These factors show lenders whether you are responsible or not with your credit. And in the end, that’s basically all they need to know.
Interested in a personal loan?Here are the top personal loan lenders of 2020!
|Lender||APR Range||Loan Amount|
|1 Includes AutoPay discount. Important Disclosures for SoFi.
2 Includes AutoPay discount. Important Disclosures for Opploans.
Direct Deposit required for payroll.
Opploans currently operates in these states: . *Approval may take longer if additional verification documents are requested. Not all loan requests are approved. Approval and loan terms vary based on credit determination and state law. Applications processed and approved before 7:30 p.m. ET Monday-Friday are typically funded the next business day.
3 Includes AutoPay discount. Important Disclosures for Payoff.
4 Important Disclosures for FreedomPlus.
5 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
6 Important Disclosures for LendingPoint.
7 Important Disclosures for LendingClub.
All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage & history. The APR ranges from 6.95% to 35.89%*. The origination fee ranges from 1% to 6% of the original principal balance and is deducted from your loan proceeds. For example, you could receive a loan of $6,000 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at the time of application. The average origination fee is 5.49% as of Q1 2017. In Georgia, the minimum loan amount is $3,025. In Massachusetts, the minimum loan amount is $6,025 if your APR is greater than 12%. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months. Borrower must be a U.S. citizen, permanent resident or be in the United States on a valid long term visa and at least 18 years old. Valid bank account and Social Security number are required. Equal Housing Lender. All loans are subject to credit approval. LendingClub’s physical address is: LendingClub, 71 Stevenson Street, Suite 1000, San Francisco, CA 94105.
†Per reviews collected and authenticated by Bazaarvoice in compliance with the Bazaarvoice Authentication Requirements, supported by anti-fraud technology and human analysis. All reviews can be reviewed at reviews.lendingclub.com
**Based on approximately 60% of borrowers who received offers through LendingClub’s marketing partners between January 1, 2018 to July 20,2018. The time it will take to fund your loan may vary.
8 Important Disclosures for Earnest.
9 Important Disclosures for Avant.
*If approved, the actual loan terms that a customer qualifies for may vary based on credit determination, state law, and other factors. Minimum loan amounts vary by state.
**Example: A $5,900 loan with an administration fee of 4.75% and an amount financed of $5,619.75, repayable in 36 monthly installments, with an APR of 29.95% would have monthly payments of $250.30.
Based on the responses from 11,574 customers in a survey of 210,584 newly funded customers, conducted from 1 Feb 2018 – 1 Aug 2019 95.05% of customers stated that they were either extremely satisfied or satisfied with Avant. 4/5 Customers would recommend us. Avant branded credit products are issued by WebBank, member FDIC.
* Important Disclosures for Upgrade Bank.
Upgrade Bank Disclosures
* Personal loans made through Upgrade feature APRs of 6.98%-35.89%. All personal loans have a 1.5% to 6% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. For example, if you receive a $10,000 loan with a 36-month term and a 17.98% APR (which includes a 14.32% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $343.33. Over the life of the loan, your payments would total $12,359.97. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Personal loans issued by WebBank, Member FDIC.
** Accept your loan offer and your funds will be sent to your bank via ACH within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes this transaction. From the time of approval, funds should be available within four (4) business days.
|5.99% – 20.01%1||$5,000 - $100,000|
|6.14% – 35.99%||$1,000 - $50,000|
|6.98% – 35.89%*||$1,000 - $50,000|
|99.00% – 199.00%2||$500 - $4,000|
|5.99% – 24.99%3||$5,000 - $35,000|
|5.99% – 29.99%4||$7,500 - $40,000|
|6.79% – 20.89%5||$5,000 - $50,000|
|9.99% – 35.99%6||$2,000 - $25,000|
|6.95% – 35.89%7||$1,000 - $40,000|
|5.99% – 17.24%8||$5,000 - $75,000|
|9.95% – 35.99%9||$2,000 - $35,000|