10 Things That Don’t Actually Affect Your Credit Score

what affects your credit score

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.

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1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Finance Lender Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)
  2. Personal Loans: Fixed rates from 5.49% APR to 14.24% APR (with AutoPay). Variable rates from 5.29% APR to 11.44% APR (with AutoPay). SoFi rate ranges are current as of December 1, 2017 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 5.29% APR assumes current 1-month LIBOR rate of 1.34% plus 4.20% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

2 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Personal Loan Rate Disclosure: Fixed interest rates range from 5.99% – 16.24% (5.99% – 16.24% APR) based on applicable terms and presence of a co-applicant. Lowest rates shown are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
  2. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with us at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  3. Automatic Payment Benefit: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.
7.39% - 29.99%$1,000 - $50,000Visit Upstart
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5.99% - 35.89%$1,000 - $40,000Visit LendingClub
5.25% - 14.24%$2,000 - $50,000Visit Earnest
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