There are several major factors that can have a huge impact on your score. The three biggest ones are your payment history, amounts owed, and the length of your credit history. If you are lacking in any of these three major areas, you could see a drop in your score. However, there are also some common credit myths when it comes to factors that don’t have any bearing on your score at all. Here, we’ll take a look at some things you may have thought made a difference in your score, but actually don’t.
Income plays a role in whether credit will be extended to you when you apply for a loan. However, credit scoring systems do not take your annual salary into account when determining your overall score. So you could be making $40,000 a year or $400,000 a year, and it wouldn’t make a difference (at least when it comes to your score). All that really matters is that you are demonstrating responsible money management habits.
2. Marital status
Are you currently in the throes of marital bliss? Well, good for you. While it’s possible for the love of your life to impact your ability to make a major purchase (when you’re apply for a mortgage, for example), it doesn’t work the same way for credit scores. Whether you’re married, single, divorced, or widowed is not a factor in credit scoring. However, marrying someone with poor money habits is not the best choice. Your love could start to rely heavily on you to bail him or her out of a financial bind. So if you’re single, think carefully before you make — or accept — that marriage proposal.
No matter how old or young you are, your age will not affect your score. Your credit score could be indirectly impacted, however, if you are young and just starting to establish credit versus someone who is older and who may have had credit for many years. Know that the length of your credit history accounts for 15% of your overall FICO score.
Your address appears on your credit report, but where you live does not play a part in your credit score. Some states do tend to have higher or lower credit scores that others, but this is not because of the location. How good you are with managing credit is what truly makes the difference. Just in case you were wondering, Mississippi wins the top spot for being the state with the highest number of residents with the lowest average credit score.
5. Checking your own credit report or score
If you check your own credit report or score, you won’t have to worry about any penalties down the road. Reviewing your own credit is what is known as a soft inquiry or “soft pull.” This is any credit inquiry where your credit is not under review by a potential lender. Don’t forget that you are are entitled to one free credit report every 12 months from each of the three major credit reporting agencies.