Factors that Do Not Affect your Credit Score

If you want to raise your credit score, concentrate on things that actually make a difference and don't waste time worrying about things that don't. Here are five factors that do not go into calculating your credit scores, with exceptions noted.

Your Income

You can have a very low income and have great credit. Conversely, you can make lots of money and have terrible credit. Information about your employer may be listed on your credit report, but score-calculating algorithms do not care if your job title is custodian or CEO. Of course, income has an indirect effect on your credit because it's tougher to stretch a low salary to cover bills and loan payments. But as long as you manage your low salary well, your paycheck will not influence your credit score.

Your Demographic Profile

While a 20-year-old may have a lower score due to not having had credit accounts for very long, your age itself doesn't affect your score. There are plenty of 50-year-olds with bad credit despite having had credit for 30 years. Additionally, it doesn't matter if you live in a rough neighborhood, and your religion, race, gender, and marital status don't go into the calculations either. The Consumer Credit Protection Act prohibits information about your race, religion, marital status, and gender from being used in score calculations. If you are on any type of public assistance, like food stamps, that doesn't affect your score either.

Credit Counseling

Many people forego credit counseling due to the myth that it will harm their credit. While many people in credit counseling have poor credit, simply being in credit counseling doesn't factor into your credit scores. Credit counseling may be shown on your credit report, so lenders may see it, but it doesn't affect the actual score. If you're in credit counseling where the counseling service makes your payments for you, make absolutely sure that they are getting your payments in on time. Any late payments, whether made by you or a credit counseling agency will harm your credit score.

Bank Overdrafts and Late Utility Payments

While overdraft charges and late fees can be expensive and annoying, banks and utilities don't report them to the credit bureaus. However, if you ignore utility bills or overdrafts and they go to a collection agency, it will definitely harm your credit score. Be sure to settle late utility bills and bank overdrafts promptly, so they will not go to a collection agency.

Checking your Credit Reports

So-called "soft pulls" which involve checking your credit report do not affect your score. In fact, you should check your credit reports annually for mistakes and fix any you find. Additionally, promotional inquiries that credit card issuers use to decide whether to pitch their products to you don't harm your score. Some employers check your credit history as part of their standard hiring practices, and these inquiries do not affect your credit score. Inquiries affecting credit scores happen when you apply for new credit. Too many can negatively affect your score, but the effects are typically small and temporary.

Sources:

http://www.creditnet.com/blog/miscellaneous/5-things-that-dont-affect-credit
http://www.myfico.com/crediteducation/whatsnotinyourscore.aspx
http://credit.about.com/od/creditreportscoring/tp/things-that-dont-affect-credit-score.htm
http://www.biblemoneymatters.com/five-things-that-don%E2%80%99t-affect-your-credit-score/