Pushdown Message Header

Pushdown Message: Not defined

You are leaving CreditOneBank.com

If you click the 'Continue' button, you will be directed to a third-party website unaffiliated with Credit One Bank, which may offer a different privacy policy and level of security. Credit One Bank is not responsible or liable for, and does not endorse or guarantee, any products, services, information or recommendations that are offered or expressed on other websites.

Click the 'Return to CreditOneBank.com' button to return to the previous page or click 'Continue' to proceed to the third-party website.

Continue

Situations That Could Affect Your Credit Score

Isaac Newton’s Third Law of Motion states:

For every action, there is an equal and opposite reaction.

But that’s physics, and physics are hard. Way beyond this little quiz. So we’re going to stick with credit scores, which aren’t nearly as difficult but follow the laws of physics in that many of the actions you take in your everyday life could cause a reaction in your credit score by increasing or decreasing it.

Take a few moments to test your knowledge by scrolling through these 10 scenarios and deciding whether each could—or could not—affect your credit score.

 

1. Your unruly puppy, who’s never met something of yours she didn’t want to destroy, chews up a credit card you rarely use. Rather than replace the card (and maybe the dog), you instead close the account.

 

Yes, this could affect my credit score
or
No, this could not affect my credit score

 

ANSWER: YES!

Closing credit card accounts could harm your credit score two ways: (1) by lowering your length of credit history and (2) by increasing your credit utilization ratio.1 It may be better for your credit score to leave the account open. And if you do order a new card, keep it out of reach of that dang dog!

1. https://www.creditcards.com/credit-card-news/closing-oldest-credit-card-pros-cons.php

 

2. You find the perfect Hawaiian shirt that’s dressy enough to wear to work but screams you’re super-chill with just the right amount of hipster irony. The friendly sales clerk talks you into opening a store credit card to save 10% on your purchase.

 

Yes, this could affect my credit score
or
No, this could not affect my credit score

 

ANSWER: YES!

You may save a few bucks on a personality-defining garment, but opening that retail credit card means a “hard inquiry” will be made to your credit reports, which could lower your credit score by a few points. That new card may also lower the average age of your credit card accounts, which could also lower your score. And because retail cards typically have lower limits and get high usage, opening one could raise your credit utilization ratio, which can lower a credit score as well.2

2. https://www.creditcards.com/credit-card-news/closing-oldest-credit-card-pros-cons.php

 

3. You suspect that your clingy, jilted ex (the one who started texting you baby names after your first date) may have opened a fraudulent credit card account in your name, so you download copies of all three of your credit reports for free at AnnualCreditReport.com.

 

Yes, this could affect my credit score
or
No, this could not affect my credit score

 

ANSWER: NO!

Checking your own credit reports is considered a “soft inquiry” and will not affect your credit score.3 So go ahead and pull those credit reports to see if your vindictive ex-significant-other did you wrong. If they did, you’re going to want to initiate the dispute process with the credit reporting agencies.

3. https://www.nerdwallet.com/blog/finance/does-checking-credit-hurt-credit-score/

 

4. You marry the man or woman of your dreams, but their credit isn’t great because they maxed out their credit cards getting a totally sick snake tattoo to celebrate your mutual love—of each other and herpetology! So you add them as an authorized user on your credit card account.

 

Yes, this could affect my credit score
or
No, this could not affect my credit score

 

ANSWER: YES!

All activity on the credit card—both yours and your spouse’s—will appear on your credit reports.4 Which means, if your spouse goes on another tattoo spending spree and maxes out your credit card to the point where you can’t make the minimum payments, your credit score will likely suffer. So make sure you can trust an authorized user to use your account responsibly before adding one.

4. https://www.creditonebank.com/articles/what-to-know-about-authorized-users

 

5. While examining your credit reports, you notice one of them lists your current address as B-A-R-E Avenue, not the ferocious-sounding B-E-A-R Avenue you actually live on. It’s a glaring mistake given the main reason you moved there was because the bear is your spirit animal!

 

Yes, this could affect my credit score
or
No, this could not affect my credit score

 

ANSWER: NO!

While an incorrect address on your credit report is technically an error, it is not an error that will harm your credit score.5 That said, you’re still going to want to tap into your inner bear and initiate a dispute with the credit reporting agency to get it corrected in order to make your credit report as accurate as possible.

5. https://www.creditcards.com/credit-card-news/wrong-address-report-hurt-score.php

 

6. You’re negotiating the purchase of a brand-new banana-yellow moped that’ll get you where you need to be with style to spare. The scooter dealership’s finance manager pulls your credit report to see which type of financing you might qualify for.

 

Yes, this could affect my credit score
or
No, this could not affect my credit score

 

ANSWER: YES!

When the finance manager checks your credit, it will count as a “hard inquiry” and may lower your credit score by a few points. Consider it a small price to pay for two wheels of yellow awesomeness. The good news is that, if you’re shopping at multiple dealerships over the course of a month, and they all check your credit, it should only count as a single hard inquiry.6

6. https://www.consumerfinance.gov/ask-cfpb/what-effect-will-shopping-for-an-auto-loan-have-on-my-credit-en-763/

 

7. While interviewing for your dream job of writing credit-themed quizzes for Credit One Bank, you authorize the bank’s HR department to check your credit report, and they do so.

 

Yes, this could affect my credit score
or
No, this could not affect my credit score

 

ANSWER: NO!

When a potential employer checks your credit report, it is considered a “soft inquiry” and won’t affect your credit score.7 What’s in your credit report may, however, affect your chances of getting the gig, as many employers consider your ability to effectively manage your credit an indicator of how well you might do managing the job.

Contrary to popular belief, employers cannot check your credit score. If they’re located in a state that allows running an employment credit check, they may only check a modified version of your credit report—and only with your written consent.

7. https://budgeting.thenest.com/can-employment-background-checks-hurt-credit-score-33819.html

 

8. You’re carrying a balance on your credit card for a high-performance mountain bike you can throw most any terrain at—until it throws you at said terrain! You’ve been making consistent minimum payments of $35 each month, but things are kind of tight this month because you haven’t been able to work much since your last tumble, so you only send a $20 payment, which gets received and posted before your due date.

 

Yes, this could affect my credit score
or
No, this could not affect my credit score

 

ANSWER: YES!

Even if your payment is on time, if it is not for at least the minimum amount due, it counts as a late payment. Payment history accounts for up to 35% of your credit score, and, according to a FICO study, a single late payment could lower a credit score of 780 by as much as 90 to 110 points!8

8. https://blog.credit.com/2018/07/how-much-will-one-late-payment-hurt-your-credit-scores-58676/

 

9. After making on-time payments for six consecutive months, your credit card company offers you a credit line increase. Thinking they may rescind their offer at any moment, you fracture your thumb from frantically tapping the “Accept Offer” button on your smart phone.

 

Yes, this could affect my credit score
or
No, this could not affect my credit score

 

ANSWER: YES!

Depending on how you use it, a credit line increase could either raise your credit score, lower your credit score, or not affect it at all.9 This is because additional credit can change your credit utilization ratio, a big factor in calculating your credit score. So use that credit line increase carefully—and start texting with your other fingers to give that aching thumb a rest.

9. https://www.creditonebank.com/articles/bob-just-got-a-credit-line-increase-infographic

 

10. A solid year of making sure you’re at your desk before your boss gets in and are still sitting there when they leave results in a substantial raise that means you can finally shop at the fancy grocery store that sells over 60 kinds of cheese.

 

Yes, this could affect my credit score
or
No, this could not affect my credit score

 

ANSWER: NO!

Your credit score does not factor in your income, so that raise won’t raise or lower your score. It could, however, indirectly affect it as your income is something lenders consider in deciding whether or not to grant you credit.10 So if you use your extra income to get more credit and create a solid credit history, you could see a bump in your score. If you blow it on video games and take-out, not so much.

10. https://www.thebalance.com/does-income-affect-credit-315386

 

Congratulations—you’ve completed the quiz. How many did you get right?

Now that you know a bit more about what affects credit scores—or now know that you already knew quite a bit about the subject—feel free to check out additional content here on Credit One Central, your one-stop source for all things credit.

 


About the author:

Sean P. Egen

After realizing he couldn’t pay back his outrageous film school student loans with rejection notices from Hollywood studios, Sean focused his screenwriting skills on scripting corporate videos. Videos led to marketing communications, which led to articles and, before he knew it, Sean was making a living as a writer. He continues to do so today by leveraging his expertise in credit, financial planning, wealth-building, and living your best life for Credit One Bank.




This material is for informational purposes only and is not intended to replace the advice of a qualified tax advisor, attorney or financial advisor. Readers should consult with their own tax advisor, attorney or financial advisor with regard to their personal situations.


Topics: