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10 Things That Are Not Factored Into Your Credit Score
Posted on January 24, 2011
You may be familiar with the information that matters to your credit repair tasks and credit score including on-time payments, amount of credit you maintain, the length of time since you established your credit account, and other financial factors. You may also know that your credit score is what lenders rely on to help them making big money decisions and allow them to approve (or deny) your credit application.
Did you know there are factors that are not included into your credit score calculation? While FICO, the company who created the three-digit number credit scoring system most often used by lenders to gauge credit worthiness, will not divulge exactly how their scoring system works mathematically, there are some things that are not factored into your score.
Here are ten personal financial pieces of information that is not a part of your credit score:
- Your age – the only way your age is a factor in credit is potentially the amount of time you have had to establish credit accounts.
- Your vitals – includes gender, race, nationality, marital status, or religion – It is against the laws in American to factor any of this data into a credit scoring system.
- Your employment – includes where you work, your occupation, job title, employer, work histories, or salary.
- Your location – includes your current address/location as well as your past information.
- Your interest rates – includes your interest rates on credit cards and any other loans.
- Your personal financial obligations – including rental conditions, child support, or alimony payments.
- Your participation with credit counseling services.
- Data that is has not been proven to predict future performance or management with credit responsibilities.
- Any data not already found in your credit report.
- Personal credit inquiries – while your credit report will show how often and who has pulled information about you which you did not initiate, your credit score does not factor in inquiries into credit that you did yourself or from companies requesting your information for promotional/pre-approval reasons.
Credit scores are a vital part of your financial stability. Not only does it affect your ability to get credit, it also makes a difference in the amount of insurance your pay for premiums, your approval for rental housing, and may potentially be a factor in your scoring a job. Many more entities are utilizing credit checks to decrease their risks for payment defaults or claims for insurance.
With a higher credit score, you also have more options for financing. Lower interest rates and faster approval times are available to people who have excellent credit scores or at least a score higher than the lenders’ standards. For those with not-so-perfect credit, financing is still available but the incentives may not be. There may also be more limitations and longer periods for approval that are required before a loan or line of credit was approved.
It will always be in your best interest to work on improving your credit score. To do so, you’ll need to establish a well-rounded mix of credit accounts including a mortgage, personal loan, and a credit card account. You need to pay your bills on-time, pay more than the minimum, and never extend your limits of credit. Credit repair is not an overnight process and does take time. But it is possible to boost a low credit score with your efforts. ?
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