Most people know the basic information that goes into your credit report and helps determine your credit score. For example, paying your bills on time, not maxing out your credit cards, and not applying for credit too frequently are all well-known ways to boost your score.
However, there are a few pieces of information that are not included in your FICO credit score (the most commonly used scoring model) that a lot of people assume are factors.
Here are five types of information that have absolutely no bearing on your credit score.
Your age
A friend recently asked me a very interesting question: "Can a 90 year old get a 30-year mortgage on a house?" The answer is an absolute "yes."
While your date of birth is listed on your credit report, it is not factored into the FICO credit score.
So, even though the chance of a 90 year old living until the loan matures is next to impossible, they can absolutely qualify for a 30 year mortgage as long as the rest of their credit information is good. And on the other hand, just because someone is young, they still have an equal opportunity for credit, based solely on their credit score.
Race, religion, national origin, sex, and marital status
Not only is this information not included in your FICO score, but U.S. law makes it illegal for lenders to take these factors into account when making lending decisions.
The Consumer Credit Protection Act prohibits the use of this information by lenders, as well as the receipt of any public assistance, or the exercise of any of your consumer rights.
Your income, occupation, and employment history
Now, these are not included in your credit report, but they can be used by lenders to make decisions.
The point here is that if you are unemployed or earn a relatively low salary, you can still build up an excellent credit score. A credit score is an indicator of how responsibly you manage your debts and other financial obligations, regardless of your economic level.
However, someone who earns $30,000 per year shouldn't buy a Ferrari, no matter how good their credit score is. That's why lenders are allowed to use this data when making decisions.
Child support/family obligations
Any item listed on your credit report as child support, a family obligation, or a rental agreement is not included in your FICO score.
However, just as is the case with income and employment information, child support obligations can be taken into account by a lender when making a decision. For example, when applying for a mortgage, lenders generally want your total monthly obligations to add up to less than 36% of your income. And, child support can be included in this amount.
Certain types of inquiries
It is widely known that when you apply for credit, the inquiry shows up on your credit report and can even lower your score by a little bit.
However, that is only true for certain kinds of inquiries. Only inquiries made by creditors that are authorized by you can be factored into your score.
The two most common types of inquiries that don't count include promotional inquiries (such as credit card companies offering "pre-approved" accounts) and inquiries made by you for the purpose of checking your own credit.
If it doesn't predict your behavior, it's not going to be included
According to the FICO website, any information that has not been proven to be a predictor of future credit behavior cannot be included in your score.
So, while this isn't an exhaustive list, these are five of the most common types of information that people think are included on their credit report, but are not.
In a nutshell, the FICO scoring formula is designed to be as fair and non-discriminatory as possible, so as long as you pay your bills on time and handle your financial obligations in a responsible manner, your credit should reflect that, no matter how old you are or how much money you make.
