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What's Fact and What's Fiction When It Comes to Your Credit Score

It may seem like credit bureaus know it all about you, but not everything shows up on your credit report. Here's the truth about how things like divorce and roommates affect your score.

One of the most common questions I get asked is what impacts a person’s credit score. Most of us know the usual things, such as paying bills on time and how much outstanding debt we have. But there are other factors that may or may not affect your credit score. I asked Rod Griffin, Senior Director of Public Education and Advocacy for Experian  (EXPGY)  what was factual and what was fictional when it comes to other areas of life having an impact on credit scores. Here’s what he shared with me.

Fiction: Education Levels Are Calculated in a Credit Report

Education level is not part of a credit report and has no bearing on credit scores. Information included in credit reports includes loans, (such as student loans) credit card accounts and payment history, account balances and other debt-related information.

There’s good news when it comes to taking out loans for your education. If you are going to college and using student loans to pay for your tuition, those loans can also help you begin to establish credit, as long as your name is on the account. That said, as with all credit products, whether loans hurt or help your scores will depend on how you manage them. If you make your loan payments on time and in full every month, student loans can help build your credit by:

  • Providing a history of on-time payments
  • Increasing your average age of accounts
  • Boosting your "credit mix"

Both Fact and Fiction: Living With a Roommate Doesn’t Affect Your Credit Score

Having a roommate doesn’t directly affect your credit score; however, there could be indirect damage to your credit if your roommate doesn’t pay their share of the rent or other bills on time. If your name is on the lease or a utility bill, you can potentially wreck your credit score very quickly with overdue bills. If you fall behind on one of your utility bills and the account goes to collections, your credit may be affected. So, your roommate’s lack of organization with bill payments and recurring monthly expenses then becomes your problem too.

One step that can help you and your roommate stay organized is developing a spreadsheet, which will help you both track your time-sensitive payments. Then, it’s time to talk about money. What seems like an uncomfortable conversation at the time can make all the difference in knowing whether your roommate is skipping out on rent-related payments.

Having a roommate can substantially cut living expenses and alleviate the monthly cost of living – but it can also come with some financial risks.

If you’re hoping for a future without roommates, a good credit score can mean that you may pay a lower security deposit on your new place. The good news is, you can ask to have your on-time rent payments reported to the credit bureaus, and you can also have your utility and telecom payments reported through Experian Boost. This can potentially help boost your credit score.

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Fiction: Low Credit Scores Don't Affect Retirement

It is a misconception that credit scores no longer matter as you age. While good credit scores may have less importance later in life, they can still play a crucial role in allowing you to experience your retirement dream.

Higher credit scores can qualify you for lower utility deposits when you get that new condo or avoid having to make a higher down payment for a house. When you have the time to travel in retirement, having good credit can also be an important resource while checking places off your bucket list. Using credit provides additional protection against fraud and lets you take advantage of discounts, airline miles, or hotel points, and a good credit score will allow you to qualify for new credit card accounts that offer benefits you may need or want. Scores also could play a part in getting the best insurance rates for a new car or RV.

    >>ReadYour Credit Score Will Influence Your Retirement Choices

To avoid the negatives of a low credit score in retirement, the tips for maintaining good financial health parallel what you would do during any other phase of life. For example, automating payments to never miss a due date for a bill is critical to maintaining a good record that supports a higher credit score. Free tools like Experian Boost can be impactful and seamless in reaching those goals by using non-traditional credit lines, such as telecom bills or payments for streaming services like Netflix  (NFLX) - Get Netflix, Inc. (NFLX) Report and Hulu, to potentially improve your credit score instantly.

Fiction: Divorce Does Not Affect Credit Scores

The stress and emotional toll of divorce results in many people neglecting their credit. This can impair long-term financial well-being.

While divorce proceedings don’t affect credit reports or credit scores directly, the financial issues embroiled in the divorce process often involve joint credit accounts, which largely do affect credit history and credit scores. If you are the primary owner of a joint account, before a divorce make sure you either remove your spouse from the account or close it to avoid unwanted transactions.

    >> Plus, from Robert Powell's Retirement Daily on TheStreet: After Your Divorce Is Finalized, What’s Next?

This is where it gets tricky — many divorcing couples are confused by the role of the divorce decree. A divorce decree may specify for the court who is responsible for accounts opened during the marriage, but it doesn't break the lenders' contracts. If a lender hasn’t modified a contract, and the responsible party under the divorce decree is not willing or able to pay, the payment obligations will still appear on the credit reports of both parties — and impair the credit scores of both individuals.

Jeanette Pavini is an Emmy Award winning journalist specializing in consumer news and protection. She is the author of “The Joy of $aving: Money Lessons I Learned From My Italian-American Father & 20 Years as a Consumer Reporter.” Jeanette is a regular contributor to TheStreet. Her work includes reporting for CBS, MarketWatch, WSJ Sunday, and USA Today. Jeanette has contributed to “The Today Show” and a variety of other media outlets. You can follow her moneysaving tips on Facebook: Jeanette Pavini: The Joy of $aving Community. Find links to her social media and her book at