Credit matters shouldn't make you feel like you're walking a tightrope without a safety net below. But not knowing for sure which actions -- or inactions -- affect your credit rating can leave you wondering if you made the right decision. Instead of living in uncertainty, find out what really matters to the credit bureaus and become a more savvy and solid financial decision-maker.
Checking Your Own Credit Report
Checking your credit report regularly is part of being proactive about your financial health, and it doesn't hurt your score. Liz Pulliam Weston, personal finance columnist and author, recommends checking in with all three credit bureaus twice a year in her book "Your Credit Score: How to Improve the 3-Digit Number That Shapes Your Financial Future." The good news is that you don't have to pay to see your credit report or your credit score. Consumers can retrieve a copy of their credit report from each of the three credit bureaus each year for free through a government-authorized service at AnnualCreditReport.com. Also, if you're interested in checking out your credit score -- an action that doesn't affect your credit, either -- Credit Karma offers free credit score viewing with registration.
Failure to Pay Your Rent
In certain instances, you may find it necessary to withhold rent because of a dispute with your landlord or with no other decision than to break your lease. While not a good practice, failing to pay your rent doesn't ding your credit. However, keep in mind that if your landlord takes you to court over unpaid rent and a judgment is entered, your credit can take a hit.
Decline in Home Value
If the current balance you owe on your mortgage is much more than what your house is worth, as a result of a decline in home value, don't fret. A drop in your house's value does not affect your credit one bit. Credit-scoring models and reporting agencies do not take this factor into consideration. However, if you miss a mortgage payment or you're late getting it in to your lender, there's a good chance your credit will suffer.
Having High Credit Limits
As long as you have a significant gap between the amount of credit you have available and the amount you have used, it won't affect your credit score or your credit profile with lenders. Keep your credit card balances at no more than 30 percent of your entire credit limit. For instance, if you have a card with a $5,000 limit, use no more than $1,500 before making a payment to lower the balance. If having high credit limits makes you nervous, don't ask credit card companies to lower your limits if you're carrying a balance. Unless you know the lower limit won't cause your current balance to exceed 30 percent, it's not a good move. Instead, wait until you pay down the balance.
Tying the Knot
If your better half or soon-to-be spouse has poor credit, don't sweat it. When you tie the knot, his credit rating won't become yours or vice versa. The only time you may have an issue is if you decide to buy something together, such as an expensive car or a home. Then, both your credit and your spouse's will be considered by the lender. The lender may not make a joint loan if your spouse's credit is poor. Also, you may fail to qualify for the loan on your own if it doesn't appear that you have the means to repay it by yourself.
- "Your Credit Score ..."; Liz Pulliam Weston
- Fox Business: Six Surprising Things That Won't Hurt Your Credit Score
- Time: 5 Things That — Surprisingly — Don’t Hurt Your Credit Score
- MSN Money: 7 Nasty Credit Myths That Won't Die
- CBN.com: Will My Boyfriend's Bad Credit Affect Mine?
- Forbes: This Week in Credit Card News
Based in Texas, Cynthia Measom has been writing various parenting, business and finance and education articles since 2011. Her articles have appeared on websites such as The Bump and Motley Fool. Measom received a Bachelor of Arts in English from the University of Texas at Austin.