We’re completing a series that examines FICO scores in depth; so far we’ve covered each of the five major factors that are used to calculate one’s score.
To conclude the series, we’d like to look at some factors that don’t affect your credit score at all.
- Income – It surprises some people that one’s income doesn’t factor into a credit report or score. Lenders will consider how much you make before offering credit or a loan, but FICO has found that what you earn doesn’t necessarily correlate with how reliably you will make your debt payments.
- Age – Length of credit history is important, but your age isn’t. Very young borrowers can get the benefit of their parents’ long credit history be being added as authorized users on the long-standing account.
- Race, creed, gender, marital status, welfare status – none of this information is included in your credit report or score. It would be against the law for FICO to consider these factors anyway.
- Inquiries that are not for credit-granting purposes – we mentioned this in the New Credit article, but inquiries by you, your employer, your landlord, marketing companies, insurers, or anyone who isn’t responding to your application for credit don’t count against you.
- Credit counseling – FICO has long understood that seeking credit counseling or debt management services are not negative indicators and don’t affect one’s credit score.
- Child support payments or obligations – so long as you don’t fall behind. If child support debt is sold to a collection agency, the negative impact to your score will be sizable.
- Your address – While your contact info is in your report, your score does not count where you live as a factor.
- Interest rates – even if you have high-rate credit cards, your score won’t be affected by that fact. Conversely, having low-rate cards won’t improve your score either.
- Rent, utilities, bank fees, insurance – so long as none of these obligations turn into debts that are sold to a collection agency, they won’t impact your credit.
Simply put, a credit score is an attempt to measure how likely you are to repay your debts. Lenders, employers, insurers, etc. use the score to estimate how risky you would be to have as a borrower, employee, etc. FICO calculates the score by considering factors that can be statistically shown to impact whether you are likely to handle your debts responsibly. Their scoring model has been proven to be reliably predictive of a consumer’s borrowing behavior.
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This post is part of the Credit Score Scale Factors, a series of articles and resources designed to prepare people to become informed and responsible credit holders. View the rest of the articles here.
Learn more about your FICO scores and credit reports with our Understanding Your Credit Reports and Scores course, free of charge here in the FIT Academy.