What's In Your Credit Report? If You're Like Most People, Not What You Think

NEW YORK (MainStreet) — There are four major factors impacting your credit score: How timely are your payments? How long have you been using credit? How much of your available credit have you been using? What outstanding payments are lingering? Most everything else just isn't going to be a factor when determine whether or not you're going to get a mortgage or a shiny new credit card. So what are some common misconceptions about what's on your credit report or in your credit score?

Income

One of the biggest misconceptions is income. Gerri Detweiler, the director of consumer education with Credit.com, notes that there's been a slight increase in the number of Americans who are aware that income does not impact their credit score, according to a recent Consumer Federation of America poll. However, many people are still under the impression that if they make more money that will result in a higher credit score.

"You would think that making several hundred thousand dollars a year would figure into how your credit score is calculated," says Randy Padawer, a consumer education specialist with LexingtonLaw. Of course, added income makes you more attractive to a mortgage broker, who will use your income to determine how much house you can afford. But as far as your credit report, credit score and other lending instruments, your income just isn't going to be a factor. This is mostly because there's too much chance that the credit bureaus will get it wrong, opening themselves up to lawsuits.

On a related note, your employer might be reported, but is generally not considered a factor in determining your credit score. Nor, for that matter, are your savings notes John Heath, directing attorney of LexingtonLaw. "If you're sitting on a giant nest egg, you're probably going to find it easier to keep current with your bills," he says. Still, that won't count when it comes to your credit report. And while how long you've been at your current job is a factor when determining a mortgage, it won't be considered when, for example, applying for a credit card.

Your Spouse's Credit

Lots of people are still under the misconception that there's such a thing as a "joint credit report" or their credit is somehow linked to their spouse's credit. Detweiler points out that while there's some basis to this belief, it's not what most people think. "Your spouse's credit doesn't impact yours unless you are sharing debt," she says. This means that existing joint accounts impact both of your credit reports. What's more, when you apply for new credit together, both of your individual credit reports will be pulled to determine how creditworthy you are.

But what about joint credit reports? "Banks pull a merged credit report for mortgages, but that's just a convenience," she says. The bank might use it in house, but it doesn't exist beyond the bank.

Overdrafts

Overdrafting your checking account might be expensive, but it's not going to cost your credit score a single point. "Specialized bureaus that have to do with checks might have the information, but it doesn't show up on your credit report until it goes into collections," says Detweiler. When you overdraft or bounce a check, you might have a harder time writing a check in the future. What's more, if you don't cover the balance, it's eventually going to go into collections. But it's not going to go anywhere on your credit report until it gets passed along to a collection agency.

Rent and Utilities

While there are some smaller organizations that offer rental reporting for those trying to build credit, for the most part, your rent doesn't impact your credit unless it's in the negative. "Most credit models don't take your rent payments into account," says Detweiler. "A prospective landlord is going to be interested, but it's probably not a part of your credit scoring models." Again, this is true unless you have a judgment or other collection against you. Then missed rent payments will show up on your credit report.

Utilities fall under the same heading. They're going to show up on your credit report when you don't pay them for an extended period of time and they enter into collections. But paying your bills on time isn't going to win you any points when it comes to building your credit. Detweiler notes that "there are a few utilities who report, but it's not widely used in most scoring models."

The bottom line is that there are only a few factors used when determining your credit. And while specific creditors might ask for more information (for example, in the case of a mortgage), for the most part, it's just not going to be considered.

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