Bad Credit Score Immunity

April 18, 2011

Your credit score takes so many factors into account, some of my readers feel like anything they do could potentially send them on the road to a bad credit score. In several follow up emails to my post on ways to improve your credit score, I had people comment that they worked hard in one area of their finances to raise their credit score, only to have something else bring it down.

As banks look for more ways to make safe lending decisions, they’ll continue to add new criteria that help them make better decisions. If you’re feeling like it’s hard to juggle all the different factors that go into your score, I thought I’d share a few things that are immune to the FICO credit scoring calculations.

According to the myFICO website, these factors aren’t considered when determining your score:

1) Demographics Prohibited by Law
The Equal Credit Reporting Act makes it against the law for credit bureaus to factor the following into your credit score – race, religion, gender, nationality, marital status, and age.

If I had to guess, I imagine that companies would like to be able to look at these factors.  If you analyze data based on these criteria it’s possible you could see patterns based on some of those factors. Their models are complex and involve lots of variables so it’s not like any one of these things would make or break your score, just feed into their calculations. If they were able to find information they thought was predictive of your borrowing risk I imagine they’d use them.

However, the Equal Credit Reporting Act prohibits them from using those factors.

2) Your Age
Using your age as a factor is one of the things not allowed by the Equal Credit Reporting Act but I thought it deserved a closer look. Although your age isn’t factored into your score, it can indirectly have an impact if you’re young and just getting started in life.  If you don’t have any credit history at all it will hurt your score, no matter how old you are. 

But many people that don’t have credit history are just starting off in life. So if you’re young and your credit report doesn’t show any record of you borrowing and paying back money it can hurt your credit score.  If that’s you, check out this article on how to use secured credit to build your credit history.

3) Employment Information
If someone wanted to borrow a lot of money from you what’s one of the first things you’d ask them?  You’d probably want to know how they planned to pay it back.  If they didn’t have a job, or some way to generate income, would you want to lend them the money?

Well your FICO score doesn’t look at whether you have a job, how much you make, who you work for, how long you’ve had a job, or the various places you’ve worked in the past.

However, even though it’s not part of your credit score, if you’re looking to borrow money, the lender will certainly ask you to verify your income.  So if your FICO score is amazing but you just lost your job and have no income, would they still lend to you?  I guess it depends on the situation but maybe not – which is why it’s smart to have an emergency fund.

4) Where You Live
The city and neighborhood you live in don’t have any direct impact on your credit score.  However, if you took out a mortgage to buy the property you live in then where you live has an indirect effect.  If you had to take out an enormous loan to buy your home that will show up on your credit report and lenders will take this into account when they examine your debt to income ratio.

5) Current Interest Rates
If you’re paying really high interest on a loan or credit card you may be trying to raise your credit score so you can lower your interest payments.  The good news is – the fact you’re currently paying high interest rates doesn’t impact your credit score.  However, if you open a new line of credit at a lower rate, like a balance transfer credit card, that will show up on your credit report and will affect your credit score.

6) Non Loan Application Inquiries
Your credit can be accessed for reasons other than you applying for a loan. For example, if you just want to check your credit to see where it stands, that doesn’t count against you. Here’s a list of inquires that shouldn’t impact your credit:

  • Requests you make for your credit report, in order to check it
  • Requests from lenders for “pre-approved” offers
  • Requests from lenders for account review
  • Requests from employers

7) Other
Here are the remainging items that round out the list of things that shouldn’t raise or lower your credit score:

  • Child Support Payments
  • Rental Agreements
  • Data not on your credit report
  • Credit Counseling Status

So if you’re feeling uncertain about what criteria impact your score and in what way, at least you know a few things you don’t have to worry about. You can also check out the 12 steps to improving your credit to get a mix of short term tactics you can use plus longer term strategies for raising your credit score.


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Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.

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6 Responses to Bad Credit Score Immunity

  • Jacque

    Yes, this information is considered at the time of determining your credit score. Improving your credit is necessary to get financial benefits.

  • Erica

    Great explanation! In my experience, the employment category is the most commonly misunderstood. Most people think that “debt to income” is a credit scoring factor, when of course it isn’t – it’s the amount you owe in relation to the amount you can borrow that is.

  • Macie

    Thanks for this post Ben, it’s very informative. As of section “7 Other” I thought that child support payments are something that definitely lowers your credit score(?) Could you please clarify this?

    • Ben

      Macie, these factors came from a page on FICO’s website listing the factors they don’t consider when calculating your FICO score. This is how they describe the one regarding child support – “Any items reported as child/family support obligations or rental agreements.”


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