Photo (cc) by Alameda County Community Food Bank
This post comes from Christine DiGangi at partner site Credit.com.
As far as credit scores go, your salary doesn’t matter. At least, not directly. But will a program for the poor impact your credit?
Credit scores are based on the information in your credit report, and because income information isn’t reported to the credit bureaus, it has no bearing on your score. Of course, having little money at your disposal could make it more difficult for you to meet your debt obligations, which could in turn hurt your credit standing.
Just like the number on your paycheck doesn’t help or hurt your credit standing, receiving government aid doesn’t impact your credit scores, either. For instance, if you’re enrolled in the Supplemental Nutrition Assistance Program (SNAP, formerly called food stamps), it won’t show up on your credit report.
In short: If you live in a low-income household that’s eligible for food assistance, you shouldn’t be worried about what that means for your credit standing. In fact, if enrolling in SNAP allows you to apply your limited resources to paying bills and satisfying financial obligations, it could indirectly help your credit.
Know what matters and what doesn’t
Among the dozens of credit scoring models out there, different bits of your financial behavior matter more than others, but for the most part, you want to focus on a few things: Pay your bills on time, minimize your debt load, apply for credit sparingly, maintain a good mix of credit accounts (credit cards, mortgage, personal loans, etc.) and work to establish a long credit history.
Payment history and debt usage are typically the most important credit scoring factors. While income isn’t directly tied to credit standing, you can see how having more money may make it easier to pay your bills on time and take on less debt.
But in the end, it comes down to how you manage your money, not how much you have of it. In the same regard, if your limited means requires you to enroll in federal assistance to get by, it won’t hurt your credit standing.
There are some paid and free services that allow you to monitor your credit scores, which can help you gauge your progress toward better credit. One free tool, Credit.com’s Credit Report Card, allows you to monitor your credit scores and it also gives you a breakdown of how you’re doing on each of the main credit scoring factors.
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