5 Things That — Surprisingly — Don’t Hurt Your Credit Score

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Illustration by Alexander Ho for TIME

There are a whole host of things that can wreak havoc on your credit score, from maxing out a credit card to having a home foreclosed on or declaring bankruptcy. But people often worry about situations or events that actually have no bearing on their FICO score, says Barry Paperno, consumer affairs manager for MyFICO.com. So take a deep breath — your credit might be better than you think it is. Here are five common misconceptions about what harms your score.

1. How much money you make. Paperno says many people are surprised when they find out their salary doesn’t directly impact their score. They’ll get a job and expect to see their credit score rise. When it doesn’t, they’re disappointed. Of course, the advantage here is that if your income drops, the scoring formula doesn’t penalize you.

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2. Whether or not you have a job. Being laid off doesn’t mean your credit score will go down. Many people who lose their jobs do take a hit to their credit, but this comes from falling behind on payments, not the job loss itself. Even if you’re receiving unemployment benefits, as long as you manage to get your bills paid on time, your score is safe.

3. Whether or not you revolve a balance. Some people think you’re at an advantage if you revolve a balance from month to month, while others believe you can charge all the way to your limit as long as you pay it off. Neither is correct. When it comes to your score, 30% consists of the amounts you owe in relation to your available credit — an equation called your utilization ratio. The lower that figure, the better. A credit score is just a snapshot of what your credit looks like on the day a lender pulls it. If you’ve maxed out a card, even if you intend to pay it off by the due date, that will reflect poorly on your score. Conversely, if you revolve a small balance in relation to your credit limit, you’re not doing yourself any favors by forking over interest to the credit card company, but your score won’t suffer.

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4. Whether or not your home is underwater. Making a monthly payment on a house that’s no longer worth as much as the amount of your mortgage definitely stings, but a drop — even a significant one — in the value of your home doesn’t mean that your score will drop, too. Paperno says the FICO scoring formula doesn’t look at the current market value of your home.

5. How much money you have in the bank. Some people think that a big balance in a checking or savings account will make them more attractive to lenders, but in reality, Paperno says your credit score doesn’t take your savings into account. If you do have a big balance in a savings account, use some to pay down other debts, since that will help your credit score.

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