11 Things That Don’t Affect Your Credit Score

By Kavya Balaji | June 4, 2019

Contrary to popular belief, changing your city or taking bank overdrafts do not affect your Credit Score. Read on to find out more.Things That Don't Affect Your Credit Score You know all about things that affect your Credit Score. These include paying your bills late or accumulating huge dues on your Credit Card, among others. But, there are a number of factors which credit bureaus never take into account. Did you know that your insurance premium payments, for example, don’t affect your Credit Score? That’s right! They don’t. There are many other similar examples that don’t have any impact on your Credit Score, even though you may think they do. Read on to find out.

  1. Borrowings against FDs – Just got an overdraft against your Fixed Deposit? There is nothing to worry about. It has no impact on your Credit Score. Credit bureaus do not consider overdrafts to be Loans unless you fail to pay your bank back and they have to start sending recovery agents. So, you can take as many overdrafts as you want without any impact on your Credit Score, but be sure to pay them back on time.

Additional Reading: Everything You Need To Know About Fixed Deposits

  1. Your salary – Have you ever seen a Credit Report? It will never contain the amount of income you make. This is because it has no impact on your Credit Score. A high salary doesn’t mean a high score. It doesn’t matter to credit agencies whether you earn a very high or very low salary. How you use your money to pay your debt matters to them. Also, note that your employment history will be mentioned on the Credit Report. Ensure that it is right because any wrong information might have a negative impact on your Credit Score.

Additional Reading: Legendary Cricketing Shots That Can Up Your Credit Score Game

  1. Insurance Premium – Insurance companies do not pass on information regarding your timely payment of insurance premiums. These payments do not affect your Credit Score. If you miss an insurance payment, your policy might get cancelled but your Credit Score will remain intact. However, note that insurance companies might look at your Credit Score before deciding your insurance premium, especially if the sum assured you need is really high.

Additional Reading: 5 Term Insurance Plans With The Best Claim Settlement Ratios In India

  1. Divorce Proceeds – The money or alimony that you might pay your spouse after divorce will not affect your Credit Score. But, if you are transferring debts to another person’s name, or getting debts transferred to your name after a divorce, it will have an impact on your Credit Score.

Additional Reading: Getting A Divorce? Here’s How You Can Split The Assets

  1. Your City – Whether you live in the posh by lanes of Delhi-NCR or the gallis in Alwar, it doesn’t matter to the credit bureaus, as long as you pay your dues on time. However, if you are changing your residence, please be sure to update it on your credit report. Wrong addresses can affect your Credit Score.

Additional Reading: The Credit Score Guide For 20-Somethings

  1. Rent – You have always been a diligent tenant. You pay your rent on time, every time. But, no, it has no impact on your Credit Score. Non-payment of rent could affect your Credit Score only if your landlord evicts you and send notices to recovery agents.
  1. Interest Rates On Loans – Whether you pay a ton of interest on your loans, or a very small amount, it really makes no difference to credit bureaus. As long as you pay your interest on time, you are safe. However, your Credit Score can affect the interest rate handed out to you by lenders. The higher your Credit Score, the lower the interest rates given to you.

Additional Reading: 5 Most Popular Home Loans

  1. Only a graduate – It doesn’t matter whether you are a graduate or post-graduate. Credit bureaus don’t really care whether you graduated from an Ivy League college or a not-so-great one. This will have absolutely no effect on your Credit Score.
  1. Debit Card – The way you use your Debit Card will not have any impact on your Credit Score. Banks do not report transactions made on Debit Cards to credit agencies. That means cheques also do not matter. However, too many bounced cheques issued on your part can certainly impact your Credit Score. Issue cheques only if you have a sufficient balance in your bank account.

Additional Reading: Why A Paid Debit Card Is Better Than An ATM Card

  1. Checking your Credit Score – Just purchased your Credit Report? Don’t fret. You can check your Credit Report as many times as you want without it having any impact on your Credit Score. However, if a bank retrieves your Credit Report, it is considered a ‘hard enquiry’. This will affect your Credit Score.
  2. Paying utility bills – Note that, earlier, paying phone bills late absolutely didn’t affect your Credit Score unless you made the payment through your Credit Card and didn’t pay your Credit Card bill on time. However, now it could affect your Credit Score since Credit bureaus are considering adding it to the credit report. But until they do that, you needn’t worry about late payments for utility bills.

How good are you at handling credit/loans? This is what credit bureaus want to know. Anything related to this will have an impact on your Credit Score. After all, you wouldn’t want to be stuck with a bad Credit Score, right?

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Category: Credit Score
Kavya Balaji

About Kavya Balaji

A personal finance professional with over 10 years of experience in financial research. She believes financial literacy is important and is passionate about sharing her knowledge on the subject.

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