What Factors Does Your Credit Score Ignore?
The FICO credit score has a range of 300 to 850, with a score of 800 or more being regarded as outstanding by most lenders.
Your payment history is the primary determinant of your credit score. Monthly payments for your home, auto, school, or personal loans, as well as credit card payments, are reported to TransUnion, Experian, and Equifax, the three national credit bureaus. You will gradually improve your credit score if you pay these on time. On the other hand, your FICO score may drop by 100 points or more if you make any one of these payments 30 days or more beyond the due date.
The percentage of your available credit that you are utilizing, the age of your credit accounts, and the quantity of new credit accounts you open can all have an impact on your FICO score.
Maintaining open credit card accounts, even if you don’t intend to use them again, paying off debt, and making on-time monthly payments are all necessary to raise your credit score.
What information is missing from your credit score?
What, though, has no effect on your credit score? A good deal, in fact, including some unexpected financial elements.
Your income is irrelevant. Your credit score won’t rise if you earn more money. Your employment situation has no bearing on your credit score. It won’t lower your three-digit score if you lose your employment.
Your credit score is unaffected by your age and does not increase or decrease with age.
Furthermore, certain payments have no effect on your score. This is because the credit bureaus aren’t notified of many of your regular payments. Your credit score won’t increase even if you pay your phone, cable, or utility bills on time each month. Neither Equifax, TransUnion, nor Experian are monitoring these payments.
Furthermore, medical expenses have no effect on your credit score. Your score won’t go up if you pay your doctor’s bill on time. It won’t fall if you pay for it after the deadline. But proceed with caution: Your credit score will suffer if your medical provider sends your account to collections because you failed to pay your payments.
Most of the time, if you rent an apartment or a home, paying your landlord on time has no positive impact on your credit score. Renters’ groups are beginning to change this, arguing that timely rent payments each month should improve credit scores.
Landlords that provide reports of their rent payments made on time might now have their credit bureaus accept them. Additionally, your credit score may benefit if your landlord does provide a record of your payments. The issue? The majority of tenants still get nothing from their on-time payments because the majority of landlords do not take part in these rent-reporting initiatives.
Is a high credit score essential? Making timely bill payments
It’s still easy to take the most important step in raising your credit score: Maintain a low credit card debt balance by paying your obligations on schedule each month. No matter what else is or isn’t included in your FICO score, if you accomplish these two things, your score will either continuously rise or stay high.