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10 Things That Don't Affect your Credit Score Research Team | Posted On Thursday, June 06,2019, 06:04 PM

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10 Things That Don't Affect your Credit Score



A credit score is a summary of credit worthiness. A good credit score has a great impact on personal finances. A good credit score can help you avail loans and credit cards at a lower interest rate. To maintain a good credit score, it is important to know the factors that do or don’t affect your credit score.

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10 Things That Don't Affect Your Credit Score

Discussed below are 10 factors that don’t affect your credit score:

Borrowing Against Fixed Deposits:

A loan availed against your fixed deposit has no impact on your credit score. The banks do not consider overdraft against FDs as loans. However, you must repay the bank else it can hurt your credit score. You can avail many overdrafts against your FD, however make sure to pay back on time.

Insurance Premiums:

Insurers consider credit score to be an important factor. Your credit score plays a crucial role in helping them decide the insurance premium. What many people don’t know is that insurance premium has no role to play in building your credit score. The insurers do not pass on premium payment information to the credit information companies like CIBIL or Experian. So, timely payment of insurance premiums have no impact on your credit score.

See Also: Check Credit Score Online

Interest Rates on Loans:

The rates of interest paid on your loans do not affect your credit score. Whether you pay high interest or low interest on loans, it makes no difference to credit score. Credit score will be affected only if you miss the repayments on loans. However, if you have a good credit score you can avail loans at lower interest rates.

Checking Your Credit Score:

Checking your credit score online has no impact. This is a soft enquiry. Online aggregators and some Companies have tie-ups with credit information bureaus like CIBIL or Experian which helps you check the credit score, as many times as you wish, without affecting your credit score.

Using Debit Cards:

Debit card transactions do not help build your credit score. The reason is that credit information bureaus take only credit accounts like loans and credit cards into consideration for the calculation of credit score. So, debit card transactions have no impact on your credit score.

See Also: Credit Score India

Changes in Income:

There is no correlation between credit score and your income. Low income or hike in salary with a promotion, does not affect your credit score. Your credit score doesn’t depend on you being employed, living on government grants and so on. However, in case of unemployment, your ability to make repayments will suffer which can be a major factor in the calculation of credit scores.

Savings and Investments:

Credit score calculation does not involve savings or investments. What does impact your credit score are loans and mortgages. Savings will not help build your credit score, but do help in payment of your loans in case of a shortage in funds. However, savings or investments do not directly impact credit score.

Your Personal and Education Information:

Personal information in your credit report is limited to name and address. Credit reports do not include any information on your religion, country, ethnicity, income or education. Any personal or education information will have absolutely no effect on your credit score.

See Also: Cibil Score For Credit Card

Shopping for best loan rates:

While applying for loans or a new credit card, you often evaluate the interest rate and terms offered by different lending institutions and banks. Most of the scoring models are efficient enough to understand if you are rate shopping. These enquiries are often considered to be a single enquiry and they hardly affect your credit score. 

Making Payments for Services Availed:

Making payments for services availed like paying your DTH bills, gas bills, electricity bills, paying for services like plumber or pet care or paying your rent on time, does not appear on your credit report. The credit bureaus have strict guidelines on the institutions that can send the credit report. Banks and NBFCs are authorized with the task of passing your credit information to credit information bureaus. Therefore, any late payment of utility bills or rent does not negatively impact your credit score.

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