Credit Scores

Here are six reasons why credit scores aren't always a fair gauge of financial behavior.


Here are six reasons why credit scores aren't always a fair gauge of financial behavior.

1. Not all on-time payments are considered equal

What's the biggest problem with credit scores? Probably that they don't rise when you pay your utility bills, medical bills, phone bills or rent on time.

But if you do fall behind on payments such as medical bills, your score might drop.


2. Your score doesn't care about your salary or job

Your credit score won't jump even if your salary rises. It also won't increase if you get a better job. Of course, it won't fall if you lose your job, either. That's because your job status or income level has no impact on your credit score.

3. Scores care as much about your past as your present

Ever declare bankruptcy? Have you lost a home to foreclosure? These negative events can cause your score to drop 100 points or more.

What if you've paid every bill on time since you declared bankruptcy? Your credit score will still suffer. You might consider yourself a new, more responsible person. But a bankruptcy or foreclosure will remain on your credit report for seven to 10 years. And it will damage your score -- although the damage becomes less as more time passes -- until it finally falls off your credit report.

4. Credit scores don't like it when you don't use credit cards

Your credit score will fall if you rely mostly on cash to pay your bills, buy your groceries or fill your car's gas tank. This comes as a surprise to some. But part of your credit score depends how consistently you pay back the money you've borrowed. If you don't use much credit, the credit bureaus can't measure how well you use it.


5. Your score doesn't care if you lost your job

You've paid your credit card bills on time every month for more than a decade. Then you lose your job. Because you're low on income, you skip one payment. That miss will cause your score to drop, even if you've had a long history of paying your bills on time. Credit scores don't take into account high unemployment rates.

6. Your score doesn't care if you are a good saver

Have a lot of money saved in the bank? Your credit score won't budge. It will remain the same whether you have $1 in y


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