Here’s the truth about your credit score: There are more things that can hurt it than help it, and there’s some confusion about how that works.
As we all know, your credit score is a powerful number based on how you pay certain bills, like credit cards and loans. But, there are some financial transactions you make in daily life that have no effect on your credit score — good or bad.
Here are four of the things you don’t have to worry about hurting your credit score.
1- Medical Expenses
Just like how the Affordable Care Act prevents people with pre-existing medical conditions from being denied health coverage, it’s good to know that FICO doesn’t discriminate based on your medical history, even if the medical costs are huge and forever.
2- Your Income
Information about your employer may be listed on your credit report, but your actual income is not. Creditors and lenders also use your income to decide whether to approve your application and how much you can afford to borrow. But having a high or low salary won’t directly impact your credit score. For example, a high salary won’t boost your credit score nor will a low salary drag your score down.
Other income sources that also don’t appear on your credit report: unemployment benefits, alimony, child support or public assistance.
3- Insurance Payment
Insurance companies use credit-based insurance scores to determine what you’ll pay for homeowners insurance. Insurance companies check your credit score to decide whether to insure you and to calculate your insurance premium. Even though they use your credit score to make decisions about you, they don’t report your timely or untimely payments to the credit bureaus so insurance payments won’t affect your credit score.
The same negative marks that bring down your credit score can impact your insurance score, and affect your payment. If you miss too many insurance payments, the insurance company will likely cancel your policy rather than send an unpaid balance to collections.
4- Cell Phone, Rent and Utilities Payment
In most cases, your on-time utility and rent payments are not reported to credit bureaus. But that doesn’t mean you can walk out on any of these bills with impunity. Like insurance companies, many utility and cell phone providers check your credit score before extending service. But these businesses don’t routinely provide your payment information to credit bureaus. Your credit score isn’t helped by timely payments on your utility or cell phone bills. The only way your utility bills can affect your credit scores is if you stop paying them.
If your account becomes past due, it may be passed on to a collection agency who would then list the account on your credit report leading to a credit score drop.
In most cases, paying your rent on time won’t help your credit score. In fact, the FICO score would ignore the rental trade line even if it appeared on your credit report. On the other hand, falling behind on your rent could lead to an eviction which would hurt your credit score and your ability to rent or get credit cards and loans in the future.