Finance Globe

U.S. financial and economic topics from several finance writers.
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Six Actions That Won't Hurt Your Credit Score

Your credit score is a mighty number that’s influenced by many of your financial decisions. Fortunately, not everything plays a factor in your credit score. Some negative actions may cost some extra money, but they won’t hurt your credit rating.

Bouncing a check or overdrafting your checking account could result in an expensive overdraft fee. But, this type of action isn’t reported to credit bureaus and it won’t hurt your credit score. You can avoid overdraft fees by opting-out with your bank, but that means some payments may be returned for non-sufficient funds. Even an NSF reversal could result in a fee, but still doesn’t affect your credit score.

Late payments on your utilities, cell phone, or car insurance. All these companies check your credit score as part of their approval process, either to decide whether you should pay a security deposit or to set your rates. But, if your payment is late to any of these, it won’t hurt your credit because they don’t normally report to the credit bureaus. You could, however, suffer a service interruption and have to pay a reconnect fee.

Losing your job or taking a pay cut. Your current employer may be listed on your credit report if you’ve listed them on any recent credit applications. But, the credit bureaus aren’t notified when you lose your job, not that it’s factored into your credit score. Furthermore, the credit bureau doesn’t list your salary so a decrease in pay won’t cost any credit score points. Both these actions could indirectly affect your credit score, however, if they subsequently affect your ability to pay your bills on time or if they cause you to increase your debt.

Being a few days late on your credit card payment. Late payments to your creditors and lenders are reported to the credit bureaus, but only once those payments are 30 or more days late. If you’re just a few days late, you can make the payment without the credit bureaus ever knowing and without suffering damage to your credit. Dodging the late fee is another issue that you’ll have to take up with your creditor.

Having a high interest rate. When your creditor suddenly raises your interest rate, you have a cause to be concerned, but it’s not because your credit score is going to take a dive. If your high interest rate is at all linked to your credit score, it’s your credit that caused the high interest rate and not the other way around. Fortunately, an interest rate increase should never be a surprise. Credit card issuers can only raise your rate if they first give you a 45-day notice, if you’re at least 60 days delinquent on your payment, or if a promotional rate has just expired.

Being retirement age. Your age doesn’t affect your credit score (not directly at least) and creditors are prohibited from discriminating based on age. If age was a factor in credit scores, being older would probably help your score, not hurt it. That’s because 15% of your credit score is based on credit age, which gets higher as a person gets older. According to CreditKarma.com, consumers age 55 and older have a higher average credit score than any other age group.
While there certain actions that will definitely hurt your credit score, e.g. a 60-day late payment or maxed out credit card, you don’t have to worry about the things on this list.

Source: myFICO.com
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Sunday, 18 August 2019

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