Paying credit accounts on time and developing a solid credit history over many years can help you earn points on your credit score. But you may also wonder if owning and responsibly managing a debit card or a savings account can help you earn points on your credit score since these are two common consumer assets.
Factors That Affect Credit Score
Five factors affect points earned or deducted on a credit score. The most significant element that FICO looks at when determining the score is the payment history (payments on time and in full). The agency also looks at total balances owed on credit accounts. Next is payment history, which is the length of time credit accounts have been open. After that comes newly opened accounts. Finally, FICO also considers the mix of various credit accounts. Note that all of these elements relate to accounts with creditors.
Debit Card Description
In truth, a debit card is only similar to a credit card in that it is made of plastic and has 16 digits. Otherwise, it is very different from a credit card. When you use a credit card, the money comes from a creditor, who can report information about the card's use to credit agencies. When you use a debit card, the money comes from your own bank account, even when you use it like a credit transaction. The bank does not usually report information about debit card use to credit agencies.
Savings Account Description
A savings account is a basic account where you can store funds for the future. Like a debit card, it is not linked to a creditor who would report positive account information to a credit bureau. A savings account draws interest over a period of time and counts as an asset toward an individual's net worth.
Little to No Effect
Since maintaining a debit card or a basic savings account does not have a direct link to credit reporting agencies, it is unlikely that it will help you earn credit when it comes to your credit score. However, in some cases, having a debit card could actually lead to a lower credit score. If a debit card holder charges over his bank account balance and fails to resolve the deficit, the bank may then report negative information about the debt to a credit bureau, which could lower the individual's credit rating.
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