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Seven Things That Won’t Hurt Your Credit Score

Written by Equifax Experts on March 3, 2014 in Credit  |   27 comments

There are a lot of things that can impact your credit score, from payment history to types of credit. But not every financial decision you make directly impacts your credit, and it’s important to understand what won’t hurt your credit score.

improve your credit scoreAs you work to improve your credit score, it’s important to be mindful of the behaviors that could help or harm it. You may already know what can help boost your creditworthiness—paying your bills on time and responsibly using credit, for example—and that missed payments, or accounts in collections, could hurt your score.

What you may not know is that not every financial decision impacts your credit score. While the following seven things could influence your financial state, they will generally not harm your credit score:

1. Paying with a debit card.

Your debit card may look like the credit cards stowed in your wallet, and both types of cards do have similar functions—they allow you to pay without cash, can be used for online shopping, and come with fraud protection. But unlike paying with a credit card, paying with your debit card does not affect your credit history or your credit score.

When you pay with credit, you are buying something now to pay back later. With a debit card, however, money that you already have comes straight out of your bank account. No borrowing is involved, even when you run the debit card as credit to avoid inputting your PIN.

The same goes for prepaid debit cards, which you can buy with a certain dollar amount already loaded onto the card. If you do come across an advertisement for a prepaid debit card that claims your card activity will appear on your credit report, the card provider will probably only report to a lesser-used credit reporting agency, according to the Consumer Financial Protection Bureau. The debit activity will not appear on your credit reports from the three national credit reporting agencies, which are used by most lenders.

2. Experiencing a drop in salary.

While a salary cut may affect some aspects of your personal and financial life, your income in and of itself is not a factor used to calculate your credit score.

But some creditors do consider your income when calculating your debt-to-income ratio, which they use to evaluate your creditworthiness. Mortgage lenders, for example, typically agree that you can pay between 28 percent and 36 percent of your gross income on all of your debt obligations.

In general, lenders view lower debt-to-income ratios more favorably. However, the Qualified Mortgage (QM) Rule, implemented in January, allows for a maximum debt-to-income ratio of 43 percent.

A drop in income could also indirectly hurt your credit score if you stop paying your bills or regularly miss payments because payment history is the largest factor used to calculate your credit score, accounting for 35 percent of the total.

3. Getting married.

Tying the knot can have implications for your finances—and the joint finances you share with your spouse—but marital status alone is not factored in to your credit score.

The credit reporting agencies keep files only on individual U.S. residents, not spouses or families. So even if you get married, you’ll still maintain your own credit file, and the same is true for your spouse.

However, if you decide to open joint accounts with your spouse, such as a mortgage or a shared credit card, his or her low credit score could make it difficult to qualify for credit.

Once joint accounts are opened, they can appear on both your credit report and that of your spouse. Any negative activity on your joint accounts, such as missed or late payments, could harm your credit score, even if payment was your spouse’s responsibility.

Also note that if you live in one of the nine community property states—Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin—all debt that is racked up during a marriage is considered joint debt. This means that if your spouse goes in to debt on his or her own account while you are married, that negative information could be listed on your own credit report.

4. Filing for divorce.

Just like starting a marriage won’t directly impact your credit score, ending a marriage won’t either.

The act of filing for divorce will not affect your credit score, but there are ways that a divorce could take an indirect toll on your creditworthiness. If you start to miss payments on your credit accounts because you are consumed by the divorce, for example, your credit score could drop.

An agreement with a lender also trumps a divorce decree, so even if your divorce decree notes that your former spouse has agreed to take on the debt from some of your joint accounts, you are still legally liable for the debt. If your former spouse does not make payments, for instance, the creditor could come to you for payment.

5. Being denied credit.

If you apply for new credit, being denied will not impact your credit score.

The act of applying for credit, on the other hand, could impact your credit score. When you initiate a request for credit, it triggers a hard inquiry on your credit report, which could lower your credit score.

6. Having high interest rates on your current accounts.

If you apply for new credit, your credit score will, in part, determine your interest rate. With a higher credit score, you are more likely to qualify for a low rate. But the interest rates you are currently being charged on your credit cards or other credit accounts are not factored in to your credit score. If you are being charged a high interest rate on a retail credit card, for example, that high rate will not reflect negatively on your credit score.

7. Participating in credit counseling.

In general, credit scoring models do not consider whether you are participating in a credit counseling service. But the actions you take as a result of credit counseling—deciding to make partial payments, for example—could reflect negatively on your credit score.

27 comments

  1. Siamak says:

    Very informative! Thanks.

  2. Anonymous says:

    None of these affect your credit score: paying with something other than credit (or any form of debt), experiencing a drop (or raise) in salary, getting married or divorced, saving and investing…Sounds like the credit score tells you almost NOTHING about your financial well-being.

  3. Ron from California says:

    I really REALLY need a new car after 15 years. I have been working on improving my credit score for several years now, but I know it’s a slow process for improvements to be noted.

    That said, I have heard that my score will not be dramatically impacted if I apply for a car loan, for instance, at numerous lenders within a short period of time. It is seen as seeking credit for one specific need. Is this true? Do you have any other advice related to this situation?

    • Mike in SC says:

      Ron,
      Each time a finance manager at a car dealership sends your loan application to a lending source (bank), your score will normally drop a few points. The dealership will do a “hard” pull on your credit, as will each bank that he forwards your loan application to.You don’t want the dealership to “shop” your car loan to too many banks if it is not necessary. Normally, 2 banks or lending sources, and you should be able to have found a buyer for your loan, unless your credit history is very shaky.The better your score is before you apply for the car loan, will result in fewer hard pulls while he shops your loan to the banks. I recently bought a house that has a $100,000 mortgage on it. My score actually went up 2 points after the loan was completed. Weird eh ?

  4. Ptrick says:

    I find it interesting that Equifax reduces your credit score by 10 points when you dispute an item.

    • Dd says:

      Really???

    • Martin says:

      That can’t be correct

    • kiya says:

      Ptrick, does the score stay down 10pts or does it go back up once the dispute is completed?

    • ErnieSC says:

      Ptrick,

      Are you sure about the 10 Points for disputing a charge? I am a Premier Member of Equifax trying to break into the 800+ Score and I’ve been watching my score DAILY since the S.C. Tax Commission was breached and all our Citizens Information including SS#’s were stolen.

      Also not from you but another person asked if Rate Shopping hurt your score. The answer from Equifax is if you shop from multiple sources within 30 days and then make ONE purchase they count it as ONE application.

      But everyone remember, Equifax, Experian, Transunion, FICO and BEACON all use different Models to determine your score and all are different.
      Most Lenders use FICO!

    • Mike In SC says:

      I have disputed 2 items on my credit report over the last 15 years, and never was my score lowered, or impacted in any way.

    • Heyzee Thrillz SEEKER says:

      of course they would, it is all a conspiracy

      • Heyzee Thrillz SEEKEr says:

        just like these comments are awaiting moderation. Do you really think you have an input on your credit life. Here’s how to rectify things, save money and pay everything in cash. Then the credit bureaus wont have a thing to say about you and you won’t care about credit anymore. Invest your money and let your money make money for you. Then you won’t have to pay interest to any credit cards.

    • EFX Moderator_KB says:

      Ptrick, it’s great that you’re checking your credit report and making sure the information is accurate. As you’ve seen, any inaccurate information in your credit file could hurt your credit score. Disputing a credit report error with Equifax does not impact your credit score. However, other credit behaviors like late payments could lower your score over time. Remember that you can’t dispute a debt if it is really yours. Please take a look at this blog post for more information about disputing credit report errors: http://blog.equifax.com/credit/how-to-find-and-dispute-credit-report-errors/

  5. DAKF says:

    What about transferring a 18k credit card debt to a zero percent interest card?

  6. Anonymous says:

    I dispute inaccuracies on a regular basis, but I never noticed points being reduced because of it. I’d double check my previous
    Report to make sure that’s why the points were deducted.

  7. Chrissy says:

    I dispute things on my report on a regular basis and have never noticed them deducting points because of it. I’d compare a
    Previous report with your current report.

  8. Rita says:

    Does canceling small credit credit cards that have annual and more they fees effect a person’s credit score?

  9. Anonymous says:

    Equifax is it true that your score is lowered if you dispute an item?

  10. Anonymous says:

    Is the above comment true? Does equifax deduct points from your score when you dispute an item?

  11. Brad says:

    Why would a hard enquiry about your credit score impact your credit rating? It should only be potentially impacted once credit is granted.

  12. Bill says:

    After losing employment seven years ago I went through seven years of working on my credit score – had to re-finance to pay off credit cards.

    During this time period I worked with all three of the major credit bureaus. It became very clear that Equifax is the one that really has their act together.

    The web site is easy to navigate and my subscription provides notification of changes that I need to know about.

  13. Anonymous says:

    Why does my credit score drops by 10 points when I have a low balance on my credit card when the new billing cycle starts. Do I need to owe nothing at the end of my billing cycle? When I check my score with equifax, it changes or stay the same at the end of the month.

  14. ThisIsNotFunny says:

    Has anyone else’s Credit score just suddenly dropped? Mine did by 107 points and I did nothing. In fact I’ve been registered for over a year now as a Voter at my address, so if anything it should have gone up.
    Equifax’s response to Question to them:
    “By analysing the information we hold on you in greater depth the new Equifax Credit Score is likely to provide a closer indication of how a lender will view your ability to manage more debt when you make a new application for credit. In particular, we have taken into account the greater focus on responsible lending that the government is expecting lenders to demonstrate so that consumers don’t become over-indebted.”
    “Your Equifax Credit Score isn’t, therefore, the actual score that will be used by lenders. It’s simply designed to be indicative of how lenders will view your application for credit.”
    So 1. They have changed their algorithms with no concrete description of how.
    2. They are stating a service they provide is not used?
    I went from Excellent to Fair over night. I hate you Equifax.

  15. Stacy B Miller says:

    A drop in your income won’t hurt your score. It would only hurt your debt-to-income ratio. If you’re thinking about applying for a loan, then there’s a problem. Loads of lenders give importance to your income as it helps them get an idea about your repayment capability.

    What actually hurts your score is a high credit-utilization ratio. So, always try to stay within your credit limit. Keep your credit utilization ratio below 30%.

  16. shereese s says:

    Wow insightful and useful info thanks


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