We’ve talked about your credit score quite a bit here on our blog. The reason is that they are 3 numbers that can profoundly affect you financially. Whether it’s the interest you pay on your mortgage, your ability to get a car loan or being able to get a credit card with an excellent APR, your credit score, and making sure that it’s a “good” one, is vital.
The reason it’s so vital is that your credit score takes into consideration practically everything about you credit wise. It looks at your credit cards, your car loan, your mortgage, your payment history, how much of your available credit that you are using and a number of other factors. Lenders then use your credit score to make an “educated guess” about the likelihood of you repaying the debt that they are preparing to give you in credit. Think of it as sort of like being graded in high school. If you want a “smiley face” on your credit report you had best get an “A”.
There are some things that your credit report does NOT reveal however and that’s the crux of our Blog today. Take a look at some of these things below and sleep better in the knowledge that, while they certainly can affect your life, those 3 numbers on your credit report don’t reflect everything about you. Enjoy.
- What you earn. While lenders will ask you this question when you apply for any type of credit, it won’t become a part of your credit score. Of course if you get a raise at work that won’t be reflected in your score as well.
- Whether you are employed or not. If you have excellent credit and you lose your job, you can rest assured that your good credit will not be damaged, at least not initially. What we mean is that if you lose your job and you don’t get another one relatively quickly, the inability to pay your debts like your auto loan or your mortgage might then start to negatively affect your credit score.
- Whether you are married or not. Until the day that you apply for joint credit with your new spouse, getting married should not affect your credit score.
- How old you are. While your age, whether you are 25 or 65, is not factored into your credit score, it can indirectly affect your score due to the length of time that you’ve been using credit. The younger that you are the more penalized, unfortunately, you will be for getting “new” credit and, conversely, the older that you are the more you stand to get rewards for having long-standing accounts in good order.
- The city or state that you live in. While some states might have higher credit scores on average than others, this fact alone has no bearing on your credit report whatsoever. The only thing that does is what you do with your credit and, good or bad, where you live doesn’t matter.
- Your debt source. If you’ve recently had a change in your payment history due to a divorce, health problems or loss of work, your score may change but the reason for that change will not be disclosed to credit reporting agencies.
- What interest you are paying right now. Whether you’re paying an above or below market rate, a prospective lender is unable to see that from your credit score. So while it’s true that your interest rate will be affected by your credit score, your credit score cannot be affected by your interest rate.
The simple fact is that your credit score makes a huge difference in not only how much money you will be able to borrow but how much interest you will have to pay on that borrowed money. What this means is simply that you need to be vigilant and diligent in repaying any debts that you have on time and meet any agreements that you have made.
Checking your credit score on a regular basis is a great way to make sure that everything is copacetic and, to that end, you are entitled to one free credit report per year from the “Big 3” credit reporting agencies which are Experian, Trans Union and Equifax. Checking these three credit reports on a regular basis to find if they have errors is an excellent idea and allows you to dispute them quickly and get them cleared off of your record.