The other day I was chatting with my brother after almost 10 years. During our conversation, I asked him about his FICO score. He was completely silent for the first few seconds. After that, he composed himself and told his credit score. His FICO score is really good, but I was a little bit perplexed by his initial reaction. When I enquired, he said - “Do you know it’s a bad manner to ask someone’s credit score?”
Now, it was my turn to be shocked and asked him why he felt so. His answer was short, simple, and straight - “It’s because you can judge a person’s financial trait and character within a second.”
My brother’s answer once again reminded me the importance of credit score in our life. And, I decided that day to post something on it.
FICO score rules various aspects of our life and we have no option but to give importance to it. But, some people get so much stressed that they feel anything and everything affect the credit score, which is completely wrong.
Here are the 6 factors that don’t make any difference to your credit score:
1 Where you live:
It doesn’t matter if you live in Manhattan or a small town to credit scoring models. You can live anywhere. It won’t affect your credit score.
2 Your personal information:
It is illegal in the country to calculate your credit score on the basis of your caste, creed, relationship status, gender, nationality, etc. So, you can be rest assured about these factors. Moreover, your medical history, political affiliation, or criminal record won’t make any difference to your credit score.
3 The interest rate you pay:
Your credit report doesn’t know how much you’re paying for interest rates on loans and credit cards. So, don’t think your credit score will be low just because you’re paying a very high-interest rate on credit cards and loans. Your credit score will be perfectly fine if you can pay high interest every month. Your credit score will drop when you’re past due.
4 Information that is not there on your credit report:
Credit scoring models calculate a score on the basis of the information that is there on your credit report. FICO obviously can’t calculate your score on the basis of the information that is not on your credit report.
5 Your professional life:
Your credit report won’t highlight your work experience, your wage, the name of your boss, etc. And this data won’t affect your credit score too. Lenders might be interested to know how much you earn, but FICO scoring model wouldn’t be.
6 Soft inquiries:
Your credit score won’t be affected by soft inquiries. This means your credit score won’t go up or down if you pull your credit report and check it. Besides soft inquiries, administrative inquiries, and promotional inquiries also affect your credit score.
Lenders make administrative inquiries to analyze your account with them. Promotional inquiries are made when lenders check your credit report to decide if they should send you a pre-approved credit offer.
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