It’s true that missing the due date on some of your bills will damage your credit score, but there are some financial transactions that don’t have any effect, either good or bad.
Although information about your employer is available on your credit report, your income is not. Creditors use your income information to determine how much you can afford to borrow and whether they can approve your application, but this information won’t directly impact your credit score.1
There’s a long-standing myth that checking your own credit score will lower it. Luckily, this isn’t true. You can check your credit report as often as you’d like through reputable sources without negative repercussions. Hard inquiries by lenders, banks and other creditors will lower your score, though.
You should do everything in your power to pay your rent on time, but if you miss a payment by a few days, don’t worry about it affecting your credit score. It won’t in most cases. If you become delinquent on your payments and are evicted, however, your credit score and ability to rent or receive lines of credit in the future will suffer.
Age is not considered when calculating your credit score. However, the older you are, the longer your credit history is, which allows more time for early mistakes to fall off your report. Young borrowers typically have shorter histories, which could limit their credit score.
Bank overdrafts can only affect your credit score if your account remains overdrawn for several weeks and is sent to a collection agency. Even then, it is not the overdraft itself that affects your score, but the debt collection from the overdrawn account.
Another myth is that credit counseling is as harmful as filing Chapter 13 bankruptcy. Though it might be noted on your report, it won’t harm your score. If a credit counselor is handling your payments, ensure they are paying on time. Late payments will hurt your score no matter who is paying them.
Much like creditors, insurance companies check your credit score to decide whether they can insure you and to determine your premium. They do not report payment habits to credit bureaus, so a few late payments won’t affect your score. If you miss too many payments, they will likely cancel your policy rather than send your unpaid bills to collections.2
Although not every action will affect your credit score, auto, student and personal loans, required credit card payments and home equity lines of credit will. At American Financial Solutions, we offer a variety of services to help you get back on track for financial success. Give us a call at (888) 282-5844 or contact us online to speak with one of our credit counselors.