Are Credit Scores Affected by Zip Code?

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There are many factors that can affect credit scores. A combination of factors that are reported by the credit bureaus contributes to your credit score, including overall debt, payment history, credit utilization, credit mix, and new credit. Knowing what affects your credit score is an important way to make sure you have the best possible score since this score affects how likely you are to be approved for credit and on what terms. Are credit scores affected by zip code?

Location-Related Factors

Location, which ties into zip code, has some connection to credit score. People of similar economic status and background tend to live near each other. In many cases, areas with a high minority population or lower income have lower average credit scores. Those with higher incomes tend to have higher credit scores. 

Married couples tend to live in better neighborhoods and have higher credit scores than those who are single. Older people tend to have higher credit scores than younger people. Areas with a better standard of living and more employment opportunities tend to be areas where the average credit score is higher.

Your Location and Your Credit Score

While certain zip codes have higher average credit scores than others, this doesn’t have much impact on you as an individual. The location of your residence doesn’t determine your credit score and moving to a different area won’t have any impact on your score. 

One way that your location may affect you is how often banks or finance companies try to solicit your business. If you do live in an area where there’s a low average credit score, you may not get as many advertisements for good deals for loans or credit cards. 

Taking Care of Your Credit

Your credit score is based on your personal credit history, not on your location. If you have an excellent credit score, you’ll still have opportunities to borrow money at attractive rates regardless of where you live. If your credit score is currently poor or fair, there are actions you can take to bring it up that have nothing to do with your zip code or area of residence.

Start by making sure any payments that are past due are caught up. Going forward, make it a priority to pay your bills on time on or before the due date. To be sure you don’t simply forget to pay a bill, sign up for reminders from your creditors or set up reminders on your phone. Another option is to sign up for automatic payments. 

If you owe large amounts on your credit cards, work on paying them down. Most credit experts recommend having a balance that’s no higher than 30 percent of your credit limit. Avoid applying for new credit too often or borrowing money that you have trouble paying back.

Watch for Credit Report Errors

Errors on your credit report can impact your credit score more than your zip code. Review your credit reports periodically and dispute any errors you find. Dovly can make this process easy and stress-free with its automated credit engine. Contact us to learn more about our free membership tier and how you can try it risk-free.

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