Financial matters that – while important to your life – don’t always appear on your credit report or figure into your credit score. That’s right! Sometimes a bill is just a bill, or an account is just an account, and it doesn’t have anything to do with your credit score. Misconceptions abound, so here’s a quick primer on some financial realities that don’t figure into your credit score:
Income – From salary and bonuses to interest earnings, child support and alimony payments, income is unquestionably the most important financial element in your life. Still, your income doesn’t appear on your credit report, nor does it directly affect your credit score. However, if your expenditures exceed your income every month, you’ll have trouble paying your bills, and late or nonpayment does impact your credit score.
Investments – Retirement savings, college savings, stocks, bonds and mutual funds – none of these will appear on your credit report, and they have no bearing on your credit score.
Insurance – How much auto, life or medical insurance you have isn’t a factor in your credit. However, if your mortgage company requires you to carry homeowners insurance (and they all do) or private mortgage insurance and you fail to do so, it could affect whether or not you keep the mortgage – and defaulting on a loan does affect your credit score. Also, while insurance doesn’t influence your credit score, your score can affect your insurance rates, especially your auto insurance rates.
Savings – Banks do not report to credit bureaus about consumer savings or checking accounts. How much you have in your account has no bearing on your credit score. However, if you have no emergency fund and experience a major financial crisis, you may have trouble meeting your credit obligations, and that will impact your score.
Utility bills – Electric, gas, water, sewer and cable bills do not factor into your credit score. However, utility companies may run a credit check on you before opening an account in your name. A poor credit history may prompt them to demand a hefty security deposit. As for your phone and cable bills, companies generally don’t report the status of those accounts to credit bureaus either, unless your account is delinquent enough to wind up in collections.