In my last blog post, I discussed the factors that the FICO credit scoring model considers to compute your credit score. There are 5 factors which the credit bureaus consider to compute your score. However, many of you have certain misconceptions regarding the factors that can influence your score. Here’s list of the factors which don’t influence your credit score.
The FICO credit scoring model doesn’t consider your age to compute your score. However, the length of your credit history is an important consideration to compute your score.
Where you live is also not taken into consideration.
Your race, color, religion, sex, marital status, national origin
All these factors are not responsible for your high or low credit score. Actually, US law prohibits these factors to consider while calculating your credit score. So, even if you’re not a US citizen or permanent resident, then even you can achieve a high credit score, provided you have a valid SSN.
Your occupation, salary, date of employment, employment history, etc.
Your occupation related information do not affect your credit score directly. All matters is how you manage your financial life with your income.
There are 2 types of inquiries – hard inquiry and soft inquiry. Soft inquiries don’t affect your credit report and score whereas, hard inquiries can affect your credit score negatively. An example of a soft inquiry is an employer checking your credit report as a part of background check. A hard inquiry can be a creditor checking your credit report in order to decide whether or not to offer your loan request and if yes, then at what rate of interest.
Apart from above, the following factors also don’t affect your credit score:
- Information not found in your credit report
- Information that predicts your future credit performance
- Whether or not you’ve participated/participating credit counseling of any kind
- Interest rate charged on a credit card or any other account
- Items reported as rental agreements or child/family support obligations
Having a clear idea regarding what affects your credit score and what don’t, will help you manage your credit report in a better way. Along with this, you also need to check and monitor your credit reports regularly, so that you can monitor it well, dispute inaccurate items and establish a positive credit history.>/p>
I will discuss about this in my upcoming blogs.