There are plenty of myths around credit scores, and it can sometimes seem like the reference agencies know everything and anything about you and your household finances. It’s not entirely correct, however.
Sure, the report is always fairly extensive when it comes to reporting your money ins and outs, and everyone from a prospective landlord to your local cell phone network can request a summary of your score. But the report is not as far reaching as you might think. Today, we’re going to take a look at some of the factors that many people believe affects their score, but actually, don’t. Let’s get started right away.
Credit reference agencies might be able to take a rough stab in the dark about your age due to your overall history. But they won’t know for sure - and neither will anyone else looking at your report. So, age is definitely not a factor - the reference agencies don’t care at all about when you were born - only how long you have been borrowing.
The amount you earn
Your credit report won’t take into account the money you earn, either. It’s only your representation of borrowing that counts. Bear in mind that your ability to pay debts off has no bearing on your income in the eyes of the reference agencies - which is why many people on good incomes but with bad credit history struggle to borrow any more money.
If you’re on social security
You might think that living on social security payments will show up on your reference - but you would be wrong. However, your ability to borrow will be based on the amount of money you bring in - judged by the actual lenders rather than the credit agencies. According to Benefit Loans Online, it can be difficult - although not impossible - to find a loan provider willing to risk lending you anything when you are on social security payments. If you do manage to find a suitable creditor, it's almost always cheaper to borrow for the shortest period available.
Taking credit counseling
If you run into financial trouble, it might be tempting to avoid getting help. Many people believe that if you approach a credit counselor, somehow their lenders will catch wind of it - and open up a financial can of worms. However, using a credit counseling service should have no impact on your score. There are occasions when taking their advice might, however, such as settling for a less than the full amount or only making partial payments. But it’s important to remember that any advice you get is not recorded.
Our final myth is another far reaching one. It’s easy to see why people think if you don’t pay an insurance bill, your insurer will hand it over to a collection agency, who will immediately mark your report. But it doesn’t work like that. Instead, the insurance company will just stop insuring you. It’s certainly not a positive result, and some would say even worse than a bad mark on your credit file. But ultimately, although insurers make credit checks before issuing coverage plans, they won’t pass on details to the credit bureau.