Maintaining a good credit score is really essential in order to achieve financial stability, especially for those who use credit cards. The only and the best way to build a good credit score is to use your credit card responsibly and wisely. The credit score doesn’t depend on just one thing but is calculated on the basis of several things, including payment history, credit utilization, credit mix, hard inquiries, and many more. A single wrong step with credit card usage can hurt your credit score badly. There are also some factors that surprisingly don’t affect your credit score, but you might be thinking that they do. Keep reading to know 5 things that don’t hurt your credit score:

Things Don't Affect Credit Score

1. Your Income & Savings

Your card issuers have nothing to do with your net worth or your savings. However, your income might be asked during the application process, but it doesn’t affect your credit score in any manner. Their only purpose behind asking about your income is to know whether you can afford to pay your credit card bills or not. Some people think that if they have a low income, they might have a low credit score too, which is not at all true. Even with a low income, you can have a better score than an individual having a very high income. You just need to make sure that you are making all your payments on time. So, your income/savings and net worth never affect your credit score.

2. Payments That Are Not More Than 30 Days Late

Your payment history is the biggest factor that is considered while calculating your credit score and hence it becomes really essential to pay your credit card bill before or on the due date. But, most credit card holders are unaware of the fact that a payment is considered late only if it has been delayed by more than 30 days and it won’t affect your credit score if you are just a few days late to make the payment. Still, you should try to pay your bills (at least the minimum amount) before the due date to avoid late payment fees and interest charges.

3. Paying Rent, Utility/Other Bills On Time

As the payment history matters a lot when it comes to building a credit score, but it is only your credit card bill payment that matters. Many people wrongly assume that their credit score might drop if they miss a utility bill or a rent bill payment, but that is not how it is. In order to build a good credit score, you just need to make sure that you pay your credit card bills on time every month as it will also help you avoid any extra charges.

4. Checking Your Credit Score

When you check your own credit score, it is called a soft inquiry and doesn’t affect your credit score. You can check your credit score as many times as you want and you should do that to keep yourself updated. But, many of you might be thinking that it hurts your credit score. There are actually two types of inquiries that are done on a credit profile: Soft Inquiries & Hard Inquiries. Soft Inquiries never hurt your credit score, but hard inquiries do affect it as these are done when someone else (a card issuer or a moneylender) checks your credit report for approval/disapproval of a credit card application. So, you need to understand the difference and don’t be afraid of checking your credit score regularly.

5. Upgrading/Degrading Your Credit Card

If you upgrade or degrade your credit card, it will have no effect on your credit score as it has nothing to do with which credit card you are using as long as you are making your payments on time, utilizing only 30% or less of your credit limit, and keeping other important things in mind. So, if you are thinking that upgrading a credit card will improve your credit score and degrading your card will drop it, your assumption is wrong as it will not affect your credit score by any means. If you have a premium credit card but you want to degrade it to an entry-level card, you can do that without worrying about your credit score.

Factors That Actually Affect Your Credit Score

  • Your Payment History (Always pay your credit card bills on time).
  • Your Credit Utilization ratio (Never use more than 30% of your total credit limit).
  • Average Age of Your Accounts (Think twice before closing your credit card account).
  • Credit Mix (Try having different types of credit rather than having just one card).
  • Hard Inquiries on Your profile (Don’t apply for too many credit cards within a short time period).

Bottom Line

If you have a credit card, it is really important for you to know what factors affect your credit score and what don’t. Now, you might have understood what you can do to improve your credit score and what will have no effect on it. So, you better focus on building good credit instead of believing in these credit score myths. As mentioned above, your credit score gets affected by only five factors directly and you should keep all of them in mind while using your credit cards. If you have any further doubts regarding the information provided above, you can freely ask us in the comment section below!

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