Some of the things that impact your credit score are obvious – like missed payments.

However, many are surprised to learn that your income has zero impact on your credit score, nor does your employment history, marital status, and age.

If you want to improve your credit score, it helps to understand the things that do and do not impact your credit score. Here’s a list of some of the most surprising things that have zero impact on credit score.

1. Income: Someone who earns $1 million per year has the same credit score as someone earning $50,000 per year, all else being equal. Your income has zero direct impact on your credit score. It’s possible to have a perfect credit score regardless of your income. It’s also possible to have a poor credit score with a high income. Although some creditors (like your bank) consider your income when applying for credit, your income does not impact your credit score.

2. Age: Your date of birth does not impact your credit score. It’s possible for an 18-year old to have a better credit score than a 60-year old. Credit bureaus do, however, consider the length of your credit history. Someone who applied for their first credit card at 18 and has been consistently paying it off for 40 years will have a better credit score than someone who received their first credit card at 50, all else being equal.

3. Job & Employment History: Credit bureaus do not consider your current job or your employment history when calculating your credit score. Whether you’re a neurosurgeon or a cashier, your occupation has no impact on your credit score. However, lenders may consider your occupation when applying for financing.

4. Religion, Ethnicity, Race, Color, Sex, and Marital Status: By law, credit bureaus are not able to access certain demographic information. Because they can’t access this information, it does not impact your credit score one way or the other. Your religion, ethnicity, country of origin, race, color, sex, and marital status cannot impact your credit sore. Lenders are also prohibited from discriminating against borrowers based on any of these factors.

5. Prepaid Credit Cards: Using prepaid debit cards does not boost your credit score, nor does it hurt your credit score. Although some people use prepaid credit cards in an attempt to raise their credit score, prepaid credit cards have zero impact on your credit score one way or the other.

6. Getting Denied for a Credit Card: If you apply for a credit card and get denied, you may be worried about how it impacts your credit score. Fortunately, getting denied for a credit card will not impact your credit score. However, when you apply for a credit card, the lender might pull your credit report, which leads to a credit inquiry that could impact your credit score. Each credit inquiry could impact your credit score for up to 12 months. Sometimes, credit card applications lead to inquiries that lower your credit score, but not always – and a denied credit card application will not lower your credit score on its own.

7. Working with a Credit Counselor or Credit Counselling Service: Whether you’re working with a credit counsellor or improving your credit on your own, the credit bureau cannot tell. Joining a credit counselling program does not lower your credit score, for example, and credit bureaus don’t know if you’ve spoken with a credit restoration specialist. If the credit counsellor recommends certain actions – like challenging entries or closing accounts – then these actions will impact your credit score.

8. Personal Data and Location Information: Your credit report features your name, address, and date of birth, but none of these entries affect your credit score. This information is considered non-predictive information: it does not raise or lower your ability to repay a loan, nor does it impact your risk of defaulting on a loan, so credit bureaus don’t use it to calculate scores.  

What Does Impact Your Credit Score?

We’ve learned what doesn’t impact your credit score. So what does impact your credit score?

Here are some of the things that may impact your credit score one way or the other:

Payment History: Payment history is one of the biggest factors in your credit score. Do you have a proven history of paying credit cards, loans, and mortgages on time? If so, you should have a good credit score. If you’ve missed a few payments, or if you’re consistently late, then your credit score suffers.

‍Amounts Owed: Do you currently owe money to someone? If so, it affects your credit score. Credit issuers consider your credit utilization ratio, which is the amount of credit you’re using compared to the amount of credit you have. If you have a credit card with a $10,000 limit and are using $0 of that limit, then you’ll have a better credit score than someone with a $10,000 limit who is using $9,000 of that limit.

Credit History Length: Finance experts recommend starting on your credit history early. The sooner you open a credit card, the sooner you can start building a credit history. Credit bureaus consider the length of your credit history. It makes up 15% of your FICO score. This includes the age of your oldest credit account, the age of your newest credit account, and the average age across all accounts. The longer your credit history is, the higher your credit score will be.

Credit Mix or Diversity of Credit: You might think you have a good credit score because you’ve had one credit card you’ve consistently paid off for years. However, credit bureaus consider your credit mix when calculating your credit score. A diverse portfolio of credit accounts is valuable because it shows you have a proven track record of paying off multiple types of credit. Credit mix accounts for around 10% of your FICO score.

New Credit: If you have recently opened new credit accounts, or if you have a large number of hard inquiries into your credit score, then this can impact your credit score. It’s a bad thing to have too many accounts or inquiries, as it could increase the risk of lending money to you, which lowers your credit score.

Final Word

By understanding what impacts your credit score – and what doesn’t – you can ensure you’re maintaining the best possible credit score.  

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