By Rachel Morey


5 Min. To Read

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Building good credit is an often-misunderstood process. Having a low FICO score means you’ll pay a higher interest rate on revolving accounts like credit cards as well as personal loans, auto financing, and mortgages. If your credit history shows negative items such as missed payments and accounts in collections, you may not be able to get credit or loans.

Raising a FICO score may take time, but the payoff comes in the form of huge savings on interest, better loan terms, and more access to credit in general. While it’s important to make all payments on time and keep balances on credit cards low, there are some things about your financial life that won’t help or hurt your credit score.

Losing your job or getting a big raise doesn’t register on the credit bureaus’ radars. Your employer’s information may be included in the personal information section of the report, but even when a credit card company asks for an updated estimate of your yearly income, it won’t end up on your credit report. Other personal income that isn’t listed on your report is your marital status, gender, race, religion, political affiliation, and education. Personal information on everyone’s credit report includes a legal name, any aliases, previous addresses, birthdate, and Social Security number. If public records show a bankruptcy or lien on a property, those will show up on your credit report, as well.

Debit card activity doesn’t have a positive or negative effect on your credit score. Even though most debit cards carry the Mastercard or Visa logo, activity on the account isn’t reported to Experian, Equifax, or TransUnion. Having a bank account closed because it’s overdrawn for an extended period could prevent you from opening an account with another bank, but your day-to-day financial transactions aren’t part of the credit report.

Making credit card, mortgage, or car payments on accounts that aren’t in your name won’t help or hurt your credit. The account-holder will benefit from your financial help but helping someone else keep their bills caught up won’t give your FICO score a boost.

If a credit card account owner adds your name and social security number to their account as an authorized user, their account history and future payment behavior impact your FICO score. Some people use this tactic to boost their low scores. Becoming an authorized user on someone else’s credit card account can also hurt your score if they don’t have a perfect payment record.

Paying all bills on time is important, but not because doing so always influences credit scores. Utility companies, cell phone service providers, landlords, and service providers like your veterinarian, home-owners association, or lawn-care company don’t report account activity to the credit bureaus. If you don’t pay these bills and the company sends your account to collections, the negative information will show up on your credit report and hurt your score, however.

Getting married won’t help or hurt your credit score, and neither will getting divorced. Sometimes, financial habits leading up to these events like making large credit card charges drop your FICO score, but the act of marrying or divorcing has no effect on your credit report.

The fastest and most reliable ways to increase your credit score include paying revolving credit accounts and loans on time, checking your credit report with all three credit bureaus for mistakes, and keeping the balances on your credit cards below 30% of your total available credit.

Building good credit is an often-misunderstood process. Here are the things that do and do not affect your FICO score's bottom line.

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