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Much has been said about what counts towards your credit score. Unfortunately, a lot of this is myth and even the parts that are true are sometimes mis-understood. So let’s sort out truth from myth when it comes to what goes into your credit report.

Library Fines

A library fine will not show up on your credit report no matter how long the book is overdue. It is easier for the library to suspend your library privileges until you pay the fine. To try and report the amount outstanding involves getting a judgement against you and then reporting it to each credit bureau until it is paid.

Late/Unpaid bills

This is the very thing that credit reports are all about. How responsible are you when using your credit and then paying your bills.

Parking/Traffic tickets

As with library fines, it is simpler to flag your license for suspension than to report it to the credit bureaus. The same holds true for denying you a renewal of your vehicle registration until all tickets are paid. Without transportation, how easy is it going to be for you to get to work everyday?

Joint Credit Card Debt

Trying to jettison debt onto your soon-to-be ex- doesn’t work unless you have the card paid off and closed as part of the divorce settlement.

Liens/Judgements

A judgement  can affect you when the judgement holder files it with the credit bureau(s). It is most effective against you when filed with all three. Otherwise, it may not be much of a drag on your credit worthiness. Liens typically are attached to property (e.g. home, car). You will not be able to sell the property in question without first paying off the lien.

Frequent Self-Inquiries

You can check both your credit report (annualcreditreport.com) and your credit score (myFICO.com) as often as you like without impacting your score. Keep in mind that the former will charge you after your first free report from each bureau. The latter will charge you every single time.

Employer/Insurer Inquiries

While prospective employers and insurers may see your credit report (with your permission), this does not affect your credit score in the least.

 Multiple Credit Card Applications

One of the big red flags is the person who applies to every loan available (usually multiple credit cards), particularly in a short period of time. This causes concern among credit grantors and FICO’s algorithm reflects this concern, meaning your score will go down.

Now you know a bit more about what counts towards your credit score. Be sure to search this blog for other articles on the subject. Keep in mind that the advice of a lender can be invaluable when trying to figure out how to raise your score. With your authorization, a lender can run your credit (it only causes a drop of 2 to 4 points) and tell you what you need to pay off/pay down and how many points such action will add to your score. If you need help with this contact me at 760 622 5087 or fakri@fakrizubek.com.

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