There are quite a few things that can help a person’s credit score as well as hurt it but not everything is either “positive” or “negative” when it comes to your credit score. Indeed, there are quite a few things that simply don’t matter at all when it comes to credit, something that should be a relief for plenty of people.
With that in mind we put together a blog article that goes over some of these things so that you can, at least for the holidays, put your mind at ease about whether or not you are negatively affecting your credit score. Enjoy.
1) Being rejected for any type of credit. Whenever you apply for credit something called a “hard inquiry” is the result, and it can lead to a very slight drop in your credit score. Interestingly enough, approved or denied your credit score won’t be affected further. What that means is that, while you should probably avoid any unnecessary inquiries or applications, getting denied for those you do apply for won’t shave any points off of your credit score.
2) Getting a pay cut. While having your pay decreased may result in having to lower your standard of living or adjust your budget, since it’s not part of your credit report at all it won’t affect it at all either. Your debt to income ratio however is a factor that lenders consider and so, if you rush out and apply for credit after your income drops, your ability to get approved for a loan may be damaged even if your credit score itself isn’t.
3) Tying the knot. If you are making plans to get married you definitely should sit down with your future spouse and talk finances before the big day. While the actual act of marrying someone won’t hurt your credit score, if your future spouse has a low score and you apply for joint credit in the future, it could hurt your chances of getting that credit.
4) Using debit cards. Like a credit card, a debit card has a number of conveniences that are certainly appealing. They allow you to make online payments as well as shop online and they also give you fraud protection and allow you to go out in public with little or no cash in your pocket. If you’re looking to improve your credit score, debit cards won’t be very much help. The way to do that is with responsible credit card use. However, with a debit card, there’s very little “buyer remorse” later because there aren’t any bills coming due for the purchases you make today.
5) Putting away your credit cards. If you want to lower your credit card utilization rate as well as pay down some outstanding balances, putting your credit cards aside for a while is an excellent idea. It certainly won’t hurt your credit score and, if you improve your debt to credit ratio, it could help it quite a bit. The one thing you do NOT want to do is close any accounts or not use them for so long that the credit card issuer ends up closing them for you. This will actually diminish the amount of credit you have available and raise your credit utilization rate, something that could lower your score. Of course while you are taking your break you still need to make your monthly payments.
Hopefully these 5 bits of advice have put your fears aside, if just a little, about what can and can’t affect your credit report. If you have any questions about credit, or questions about personal finances in general, please let us know and we’ll get back to you with answers and advice ASAP.