Credit Score Questions: 5 Things You Probably Don’t Realize Are Affecting Your Credit Score : A credit score is a number between 300 and 840, designed to rate your creditworthiness. The higher your number, the more desirable you are to lenders who (obviously) need to feel confident that you’ll repay what you owe.
Banks, financial institutions, landlords, and insurance companies are just some of the many establishments and businesses that rely on credit information to make informed decisions about whether or not to trust a person. If you want your credit score to be excellent, here are a few surprising things that could affect it.
Your Taxes
You might discover how important it is to hire a personal tax accountant when you learn that your tax situation can affect your credit score. When you don’t pay your taxes, the IRS can place a federal tax lien against your property, which lenders can discover through public record searches when considering you for future loans and mortgages.
If you pay your taxes with a credit card, you might also impact your credit score by not being able to pay off the total amount or pushing your credit utilization rate over 30%.
Unpaid Medical Bills
Over 40% of Americans have healthcare debt, with 12% facing debt levels higher than $10,000. If you have medical debt that has gone to a collection agency, this might show up on your credit report, affecting your borrowing abilities in the future.
However, you can expect some changes in this regard. From July 2022, if medical debt showed up on your history due to it going to collections, and you have since paid it off, the most prominent credit-reporting companies will stop including it on your report. Before July, it would stay on your record for seven years. The new changes also mean that unpaid medical debts wouldn’t show up on credit reports for a year after they go to a collection agency.
Unpaid Parking Tickets
Parking tickets can be expensive, and it’s easy to assume the repercussions of not paying them aren’t significant due to the nature of the crime. However, not paying your parking tickets might wreak havoc on your credit report.
Unpaid tickets can be sent to collections, which can be a black mark against your name that brings down your credit score. Fortunately, most major credit reporting agencies no longer report debts that haven’t arisen from contracts or agreements to pay.
Student Loans
Student loans can be an excellent way to establish a good credit history when you’re paying as much as you’re required to pay. However, they can also impact your debt-to-credit and debt-to-income ratios while lowering your credit score simultaneously.
Student loans can appear on credit reports like any other financial obligation, and, like other financial commitments, your credit score can be affected by on-time, late, and missed payments.
Phone Payment Plans
Phone payment plans are one of the easiest ways to obtain the latest and greatest devices. You can purchase the newest phone, sign up for a plan, and spread out your payments over several months.
Just keep in mind that phone companies don’t take kindly to late and missed payments. If you have an installment loan like a phone payment plan, you can expect the financial information from this plan to show up on your credit report.
Your credit score can make or break your borrowing potential, and you might not realize just how many everyday actions affect it. If you’re about to borrow money or make a significant purchase, now might be the right time to check your finances and ensure you’re doing everything possible to maintain a healthy credit score.
Credit Score Questions: 5 Things You Probably Don’t Realize Are Affecting Your Credit Score
Credit Score Questions: 5 Things You Probably Don’t Realize Are Affecting Your Credit Score
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