Credit score - Things that will or will not make a difference

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Credit score determines the financial fate of millions of Americans. This number holds the key to a robust financial life. Read along to know about some things which may or may not make an influence on your credit score.

Little things that will make a difference to your credit score

Here are some small but important things which will ding your credit score.

1. Neglecting a collection account: You may ignore a bill that has gone to the collection agency. You may assume think that there is no need to pay the bill. However, if you do so, your score will be in a big mess. The collection agency will report the account to the credit bureau after a stipulated period of time. You can lose as much as 100 points.

2. Skipping a payment:
A lot of people think that a couple of non-payments will bring down their credit score. However, in reality, a single non-payment can ruin your impeccable credit score. Your score can drop by as much as 100 points.

If a single missed payment does not result in extra financial woes, then your score may start improving within a year. If your credit score was poor before the missed payment, then it won't revive within a year.

3. Forgetting about your credit report: You should monitor your credit report even when you’re a stupendous credit borrower. Take some time out of your busy schedule and have a look at your credit report. If there are multiple wrong credit details on your credit report, then your credit score will take a big hit. People often find errors on their credit reports. So, there is no guarantee that there won't be a single error on your credit report. In fact, around 40% of the consumer credit reports consist of wrong information on them.

Things that will not change you credit score by any means

Check out the 3 things which will not make a difference to this magic number.

1. Non payment of rent: If you have not paid the rent because of a dispute with the landlord, then it does not mean that your credit score will drop. If the landlord does not file a lawsuit against you and receive judgment, then the item will not appear on your credit report. This means that your credit score won't get affected.

2. Changes in your cash flow: There can be a huge change in your income after you lose your job. You may grab a part-time job or stay unemployed for several months. However, it will not make any difference to your credit score. In fact, your score won’t get affected as long as you pay your bills on time. Your income and assets will influence your chance of obtaining a loan or credit cards at favorable terms and conditions. Your score will remain unaffected.

3. Late payments to small creditors: Not all the creditors report to the 3 credit bureaus in the country. For instance: small vendors usually don't report account details to the credit bureaus. So, if you haven’t made payments to the small vendors, then your score may not drop by a single point.

Credit score really makes a big difference to your financial life. It is a major element of your financial life but not the only one. Lots of other factors play a significant role in determining the nature of your financial life.iting as purchasing a brand new computer or a flat screen TV, but it will help your finances grow at a steady pace. The tax refund check, if used wisely, will ease the pressure of credit card bills and mortgage payments and let you breath a little easier.

Last Updated on: Thu, 10 Jan 2013

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