What You Don't Know About Your Credit Score

This post was written by Debbie Dragon (see note below).

It wasn't that long ago when the majority of people didn't realize they had a “credit score”. It was generally understood that there was a credit history saved on each individual who had borrowed money at some point in time- but the fact that there was a credit score wasn't as widely known.

Most everyone is aware of the credit score now, specifically, the FICO credit score that's used by the majority of credit lenders to determine an individual's creditworthiness. Now that we all know we have a credit score, you may be surprised to find that there are several things you don't know about your credit score:

• Your credit score is taken into consideration by most automobile insurance companies when calculating your auto insurance premiums.
• Your credit score can be the reason you are denied employment at certain companies (or the reason you land the job over someone else who may even be more qualified according to previous work experience or education, but who happens to have a lower credit score!)
• The calculation of your credit score does not take into consideration your debt to income ratio. In fact, the credit score doesn't even consider how much money you earn, where you work, how long you've worked there, or whether you're working at all.
• Your credit score doesn't consider how much credit you have available to you. Most people are under the assumption that having tens of thousands of dollars available to them will lower their credit score, when in fact- it's the amount of credit you are using in relation to the amount you have available that is used in the calculation of your credit score. If you have $5,000 of credit available to you and are only using $250, you're in good shape and will have a higher score than someone who has $5,000 and is using $4,500 of it.
• Your age, gender, race, nationality, marriage status and where you live don't make any difference when it comes to credit scores.
• If you owe a percentage of your pay in child support obligations, the credit score doesn't care (or even know about it- it's not reflected in your score at all!) This is true whether you pay 19% of your pay in child support payments or 80%.
• If you find yourself having difficulty managing your debt effectively, you can join a credit counseling program without fear that it will be reflected in your credit score. The score doesn't take into consideration whether you are receiving counseling for credit reasons or not.

Note
Debbie Dragon is a writer for CreditorWeb.com, where she writes about credit cards, rewards programs and personal finance issues.

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