True or False? A Pay Raise Will Boost Your Credit Score

What's Hot

Do This or Your iPhone Bill May SkyrocketSave

23 Upgrades Under $50 to Make Your House Look AwesomeAround The House

Trump Worth $10 Billion Less Than If He’d Simply Invested in Index FundsBusiness

11 Places in the World Where You Can Afford to Retire in StyleMore

What You Need to Know for 2017 Obamacare EnrollmentFamily

8 Things Rich People Buy That Make Them Look DumbAround The House

32 of the Highest-Paid American SpeakersMake

Amazon Prime No Longer Pledges Free 2-Day Shipping on All ItemsMore

More Caffeine Means Less Dementia for WomenFamily

9 Tips to Ensure You’ll Have Enough to RetireFamily

30 Awesome Things to Do in RetirementCollege

5 Spots Where Retirees Can Live for Less Than $40,000Real Estate

10 Ways to Reduce Your Homeowner’s Insurance RatesFamily

10 Ways to Pull Together the Down Payment for a HomeCredit & Debt

Chew on This: The Story Behind Your Hershey’s Halloween TreatsBusiness

It turns out that many of us have misconceptions about what affects our credit profiles, and what does not. A new report offers some clarity.

Surprise! Consumers are still confused about what goes into a credit report and a credit score. Given how opaque these things were for such a long time, it’s entirely predictable that confusion reigns.

It’ll be that way for a while. Credit bureau Trans Union released a survey Thursday with more proof that the mythology built up around credit reporting will take a long time to undo. Heck, apparently one in four Americans think the sun revolves around the Earth, so fixing this will take a while.

The myth that I think will be hardest to beat back is the notion that income or assets have anything to do with credit reporting. They don’t, even if they should. You might have $1 million in the bank, or have just landed a huge raise, but you’ll be denied a credit card if your credit score is low or you have a thin credit file.

Trans Union found that about half of American adults think a pay raise bumps up their credit score. And even people with good credit are confused about what went into that good credit.

Some other findings from their online survey of about 1,000 people:

  • Which payments affect credit scores: Nearly half erroneously identified rent (45 percent) and cell phone (47 percent) payments as directly affecting their score; yet, these aren’t regularly reported to credit bureaus. (Consumers with excellent credit were even more confused on this point, with 49 percent holding the mistaken belief that rental payments are included in their report.)
  • Information in credit reports: Among survey respondents who checked their credit report in the last 30 days, about half mistakenly believe their full employment history (55 percent) and income level (41 percent) are included in their reports. (They aren’t).
  • Pay raises: Nearly half (48 percent) of respondents who’ve checked their credit report in the last year incorrectly believed an increase in income improves their score. (Income is not part of the credit scoring system).
  • Credit inquiries: 40 percent of respondents who’ve never checked their report are unsure how checking it affects their score. (In general, consumers inquiries  — or “soft pulls” — don’t impact scores.)
  • Trended information: 70 percent of those who’ve checked their report in the last year incorrectly assumed that it reflected recent changes or trends in their finances over time. (Only credit events — not the size of your bank account — have an impact).
  • Paying down debts: 61 percent of those who checked their report in the last 30 days erroneously believed paying off debts from late payments automatically increases their score. (It does help, but the improvements take time)

Sign up for Bob Sullivan’s free email newsletter.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!


Read Next: 13 Tips for Spring Cleaning Your Finances

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,705 more deals!