Learn what factors are never used to determine your credit.
Money Girl
263 MG 9 Things That Can't Hurt Your Credit Scores
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If you're like most people, you want squeaky, clean credit, so you can borrow money at low interest rates and pay less for insurance and security deposits. While it's important to focus on factors that raise your credit scores, it's also important to know what has absolutely no effect on them, so you don't sweat the small stuff. Here are nine factors that can't hurt or help your credit scores. Factor number one, your personal information. Information like your name, current and previous addresses, social security number and birth date are included on your credit report with each of the three nationwide credit reporting agencies, which are Equifax, Experian and TransUnion. However, none of it has any bearing on your credit scores. Instead, the information that's used to calculate your credit scores includes account information, like payment activity on your loans and credit cards, public information like a recorded tax lien or bankruptcy, and inquiries from lenders in response to your application for new credit. That means your marital status, gender, race, education level and age are not used in any way to determine your credit rating. Factor number two, changes to your income. You may be surprised to know that your income isn't included on your credit report, and therefore earning less has no negative effect on your credit scores, as long as you continue to pay your bills on time. Of course, losing your job or business could severely affect your ability to do that. Even receiving unemployment or another type of public assistance will not hurt your credit scores. Creditors generally get your income information from an application you submit, so making less money could be a stumbling block to getting new credit, because in addition to your credit score, your income, expenses and job stability are taken into consideration by a lender. Factor number three, using a debit card. Debit and credit cards look alike, but that's where the similarity ends. Your bank activity isn't listed on your credit report, so while using a debit card or a prepaid debit card is convenient for making everyday purchases, it won't help you build credit. Factor number four, getting turned down for credit. If you've been turned down for credit, you may be worried that this can hurt your credit scores. Don't. Your credit report doesn't show whether an application for a loan or credit card was approved or declined. So it may hurt your feelings, but it definitely won't hurt your credit scores. Factor number five, paying small merchants. Bills you pay to small companies or individuals for local services like lawn care, pest control or rent typically don't show up on your credit report. The three nationwide credit bureaus have strict requirements about who can report consumer information to them, and in many cases, it's just not feasible for small businesses. If a merchant doesn't report payment information to the credit bureaus, then your payment history without company can't affect your credit scores. However, if you don't pay up and they turn your account over to a collection agency, well, that's another story. Collection companies typically report information to the credit bureaus on accounts that they acquire. The best way to find out which companies report information to your credit report is to get a free copy of it at annualcreditreport.com. In Colorado, our freedoms are everything. Gabe Evans would rip them away. 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Visit ixcel.com/moneygirl to get the most effective learning program out there at the best price. Factor number six, paying someone else's bill. If you want to do a family member or friend a favor by paying their bills, do it from the kindness of your heart and not because you think it will boost your credit. Regardless of who pays a bill, it only gets reported on the credit file of the person who owns the debt. Factor number seven, adding an authorized user. Adding someone to your credit card as an authorized user allows them to get a card in their name and to make charges up to the credit limit that you allow. An authorized user simply rides your credit coattails and has no legal responsibility to repay the debt. Their credit situation can't affect yours in any way, but you can help them build credit. However, your credit scores could crash and burn if an authorized user abuses a credit card and you can't afford to make the minimum monthly payments. So always be cautious about adding anyone to your credit cards. For more information, be sure to listen to podcast episode number 188 called, "Should you have a joint credit card or an authorized user?" You'll find it in iTunes or on the Money Girl page at quickanddirtytips.com. Factor number eight, going loan shopping. Applying for new credit results and what's known as a hard inquiry on your credit report and it temporarily dings your credit. That's because credit inquiries are a signal that you may be taking on new debt, which represents potential risk for creditors and merchants. However, most credit scoring models are sophisticated enough to recognize when you're shopping around for the best interest rates. So don't hesitate to get multiple offers for an auto loan or a mortgage refinance. Credit scores may ignore multiple inquiries or simply count them as one inquiry if they occur within a specific timeframe, like two or three weeks. Factor number nine, checking your own credit. Many people are skittish about getting their free credit report because they mistakenly think it'll count against them. Pulling your own credit report is called a soft inquiry and it never hurts your credit scores, no matter how often you request it. You can learn more about how to check your credit report and get errors corrected in my credit score survival kit. It's a free resource I created for you with a video tutorial and three smart strategies to build excellent credit scores. Plus, I tell you how to save money by getting your credit score absolutely free as often as you want with no strings attached. Download the credit score survival kit for a limited time when you visit smartmoose2growrich.com. For more money tips, be sure to sign up for the MoneyGirl newsletter, join the MoneyGirl Facebook page, and follow on Twitter where my username is @lauraadams. L-A-U-R-A-A-D-A-M-S with no space. Just visit the MoneyGirl page at quickanddirtytips.com if you forget my contact information or need advice about other personal finance topics. I'm glad you're listening to change. That's all for now. Courtesy of MoneyGirl, you're gone to a richer life. In Colorado, our freedoms are everything. Gabe Evans would rip them away. Just like Lauren Boebert, he'd ban abortion without exceptions for rape or incest and overturn the right to marry for same-sex couples. Don't let him take our freedoms. Paid for by DCCC, www.dccc.org, not authorized by any candidate or candidate's committee. Kendra manages your payroll. She's also six weeks pregnant. Maybe it's time for a group dental plan with extra TLC for moms to be. Grin from within, United Concordia Dental. Learn more at grin with ucd.com products under written by United Concordia Insurance Company. Thank you for your attention.