A credit score being a report card on your financial life is one of the most important 3-digit number. As you might already know credit score is what that helps determine your loan amount, interest rate, and tenure. Though there are many factors that affect your credit score on which there are many articles, in this article we are going to talk about some of the myths that actually do not affect your credit score.
1. Utility bills
When ever you see the “bill payment on time is important” there are some who assume that all bills which include, utility bills or shopping bills are also part of the credit score. On its own these bills do not affect your credit score in any way. It will affect only when you pay using your credit card or take a loan to pay the bills and not pay the EMI or Credit Card bill on time. When someone says bills with respect to credit score it means credit card bill or EMI.
2. Employment status
Many people think that employment status is updated in credit score or that if you change jobs frequently your credit score is affected. In reality your credit score is not affected by where you work or how long your work. It is dependent on your loan or credit card approvals with respect to bank’s internal criteria.
Again, salary is something that is not updated in the credit report. There is a belief that if a person earns more and is rich will have a better credit score compared to a person who earns less. It is dependent on how you regular you are with your loan repayment than how rich you are.
4. Spouse’ credit history
There is a misconception that once a person gets married their spouse details will be part of their credit report. That is not true. Each report is unique only to that person. This question rises because of the availability of joint loans for a married couple which banks provide after individually considering each person before approving an application. They take the salary of the spouse into consideration to increase the loan amount eligibility.
5. Bounced cheques
Banks do not report any bounced cheques to not affect your credit score. As the credit bureaus like CIBIL™, Equifax, Experian and CRIF High Mark only deal with credit like loans and credit cards associated directly with financial institutions, any bounced cheque owing money other than financial institutions will be not reported by the bank or NBFC.
6. Non – Traditional loans
If you have borrowed from any non-traditional lender who are not a part of the registered banks or NBFC, will not be a part of the credit report. Credit reports only take details from registered banks and NBFCs, they do not answer to or take information from others.
7. Interest rate of loans
Your interest rate of any existing or old loan or credit card accounts will not be a part of the report and it does not affect your credit score in any way. In fact, it is the other way around where the loan amount, interest rate and tenure are affected by credit score.
8. Debit card details
Your debit card details or how much you spend with it will not be a part of the credit report. As credit reports only take into consideration the loan or credit card bills in other words the borrowings of a person from traditional sources debit cards, where you can spend only the money you have is irrelevant.