1. Good Credit:
The available “space” on your credit cards helps to show credit-worthiness. Closing cards shrinks your credit “space.” Alternatively, requesting a limit increase can potentially boost your score, but not always.
2. Older/Better:
The age of your credit card accounts is an important factor in determining credit worthiness. Closing your oldest card can cause your score to drop.
3. Education Aside:
Your degrees do not improve your credit score. Likewise, having a high school education or less does not detract from the score.
4. Other Non-Factors:
The balance in your bank accounts, stock, portfolio, employment status and/or your salary have no bearing on your credit score.
5. The 5 Factors:
Payment history is 35% of the score. Amounts owed is 30%. Length of credit history is 15%. The credit mix (cards, loans, etc.) is 10%. And new credit counts for the remaining 10%.
6. New Credit:
Even in today’s enlightened times, opening several new credit accounts in a short period of time can lower a score, especially for those with a short credit history.
7. Job Privacy:
The myth that employers can get your credit score is just that — a myth. They can, however, with your approval, get a specialized version of your credit report for employment screenings.
8. Data Usage:
While car insurance companies don’t use your credit score to help determine your insurance rates, over 90% of insurers use a credit-based auto insurance score when considering insurability.
9. Married/Divorced:
After a 15-year study, the Federal Reserve discovered that couples with widely varied individual credit scores in the beginning of the relationship were more likely to separate.
10. The 1950s:
Credit scores didn’t exist until the mid-20th Century. Prior to that, one would sit down with a banker directly in a very varied, subjective, difficult loan process.
11. Zero Score:
No credit score? Never fear, you can still get a mortgage through “manual underwriting” which takes into account assets, bills and your overall financial health.
12. Other Scores:
Banking matters are tracked as well, via TeleCheck, ChexSystems, and EWS which help determine things such as whether or not you should be allowed to open a checking account.
