Plenty of things can help a consumer’s credit scores, and even more can hurt it. But not everything is positive or negative. Some things in the financial world just don’t matter when it comes to credit.
This may be a relief to some people who are worried about hurting their credit because of issues relating to a job loss, for example. On the other hand if you’re trying to improve your credit scores, and think that debit card you’ve been using is helping, you’ll be sorely disappointed with the results. With all that in mind, here are a few things that you may be surprised to find won’t hurt your credit scores.
1. Debit Cards
Debit cards come with a lot of the same conveniences as credit cards, like online payments and shopping, fraud protection and the ability to shop without carrying cash. For consumers looking to improve their credit scores, debit cards won’t help. Responsible credit card use is the way to go, though debit cards have their advantages: There’s no bill to pay later and spending is limited to the amount of money in the account if you don’t opt for overdraft protection.
2. A Drop in Income
A pay cut may have negative implications for your budget or standard of living, but a pay cut alone will not hurt your credit score because income is not part of your credit report. However, it’s important to remember that your debt-to-income ratio is a factor lenders consider when approving you for certain types of credit, like a mortgage. So if you’re applying for credit soon after a drop in income, this may affect your ability to get approved for a loan, even if it doesn’t hurt your credit score itself.
Applying for credit results in a hard inquiry on your credit report, which can lead to a slight drop in credit scores. Whether you’re approved or denied has no bearing on your credit score, so while you should avoid unnecessary inquiries and applying for credit you don’t qualify for, getting denied doesn’t shave extra points off scores. However, you may want to find out why you weren’t approved, and you’re entitled to a free copy of your credit report and credit score in such instances. You can also see your credit scores using the Credit Report Card, a free tool that updates monthly and explains what parts of your credit profile could be hurting your scores.
4. Taking a Break From Credit
To be clear, this is just a break, not a full-fledged breakup. Say you overspend around the holidays — it’s not a bad idea to put the credit cards away for a bit, while you lower your credit utilization rate and pay down any outstanding balances. A brief hiatus won’t ding your scores — it could help if you significantly improve your debt-to-credit ratio — but don’t go so far as closing accounts or leaving them dormant so long that the issuer closes the account for you. That will diminish your available credit, raise your credit utilization rate and may ding your scores as a result. Continuing to make your monthly payments is a must, and making the payments will keep your account active.
5. Getting Married
While your future spouse’s credit score is worth noting — he or she may have some habits that could cause financial problems for you later — marrying him or her isn’t going to hurt your credit score. A spouse’s low score could hurt your chances of getting joint credit in the future, but just the simple act of signing a marriage license isn’t going to harm the credit score you had going into the relationship. You won’t wake up the day after you get married and find a drop in your score.
However, once you are married, and if you live in a community property state, take note. According to credit scoring expert Barry Paperno, if your spouse defaults on an account, in some cases you can still be sued and end up with a collection or judgment, or both, for that debt — even if your name isn’t on that account. (This will, in turn, hurt your credit score.)
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