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Debunking credit card myths: Do my assets affect my credit score?

Jan. 15, 2021
4 min read
Debunking credit card myths: Do my assets affect my credit score?
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It’s no surprise that travel rewards credit cards get a lot of coverage here at TPG.

By strategically applying for and then utilizing these cards, you’ll unlock the ability to redeem your hard-earned points and miles for things such as first-class flights and luxurious hotel rooms. However, there are a number of misconceptions out there when it comes to credit cards, so today I’ll continue our January series that debunks these myths and allows you to begin planning for your next vacation.

Today, I’ll consider another aspect of your financial profile that seems like it should have an impact on your ability to be approved for a card.

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Your assets and the relationship with your credit score

There’s a popular misconception out there that high net worth equals a high credit score.

On the surface, this makes sense. If you own a home, own a car, have large investment accounts or maintain significant balances in your checking or savings, this should theoretically make you more attractive to credit card issuers. After all, you’re probably less likely to default if you have significant capital to cover your monthly purchases.

Related: How to check your credit score for absolutely free

However, when it comes to computing your actual credit score, your collection of assets (or lack thereof) doesn’t have any impact. Once again, let’s revisit the five main factors that contribute to your FICO score, the one most frequently used to determine creditworthiness:

  • Payment history
  • Amounts owed
  • Length of credit history
  • New credit
  • Types of credit used

As discussed in previous installments of this series, these five factors are weighted based on how important they are to your score.

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(Photo by The Points Guy)

As you can see, none of these are explicitly tied to assets such as bank accounts or other personal property. Instead, they all relate to how well you have managed the lines of credit that have been extended to you. Just because you’re a high-net-worth individual doesn’t guarantee that you can keep your credit utilization rate low, pay your bills on time, etc.

Related: What is the difference between a hard and soft pull on your credit report?

Now, that being said, there is one important way that your assets can impact your credit score: when you have installment loans associated with those assets (such as a mortgage or car loan).

These types of accounts give you additional ways to build up your credit history, and they can also vary the types of credit you are using. Believe it or not, owning a house and car free and clear could actually be a negative when it comes to your credit score, as your credit profile may be limited to only credit cards.

In addition, while your assets won’t directly impact your credit score, they do play at least a small role in the credit card application process. Just about all issuers will ask the following questions (in some way) when you apply for a new card:

  • Do you have a checking account, savings account or both?
  • Do you rent or own?

If you answer “both” to the first question, that may signal that you are financially responsible, and owning a home could also help you be viewed in a positive light. However, remember that the issuer has no way to verify the authenticity of these two answers (unless your accounts and mortgage are with the same bank), so they won’t have any formal impact.

For additional recommendations for managing your credit card account(s), be sure to check out my Ten Commandments for Rewards Credit Cards.

Related: These are the best beginner credit cards

Bottom line

Many new readers may think that getting into the points and miles hobby (especially with premium cards such as the Chase Sapphire Reserve) is limited to those with significant assets and high net worth. While this does apply to certain cards, the most important factors on your credit score are those related to how well you’ve managed your credit through the years.

Don’t let a perceived lack of assets prevent you from applying for a new card.

Additional reporting by Chris Dong.

Featured image by Getty Images/Westend61
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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How we chose these cards

Our points-obsessed staff uses a plethora of credit cards on a daily basis. If anyone on our team wouldn’t recommend it to a friend or a family member, we wouldn’t recommend it on The Points Guy either. Our opinions are our own, and have not been reviewed, approved, or endorsed by our advertising partners.
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TPG featured card

Best card for premium perks while traveling
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards

2 - 10X points
10XEarn unlimited 10X miles on hotels and rental cars booked through Capital One Travel
5X5X miles on flights booked through Capital One Travel.
2X2 Miles per dollar on every purchase, every day

Intro offer

75,000 bonus miles
Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel

Annual Fee

$395

Recommended Credit

740-850
Excellent
Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

Why We Chose It

The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

Pros

  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,300+ lounges, including Capital One Lounges and the Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023
Best card for premium perks while traveling
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards Rate

10XEarn unlimited 10X miles on hotels and rental cars booked through Capital One Travel
5X5X miles on flights booked through Capital One Travel.
2X2 Miles per dollar on every purchase, every day
  • Intro Offer
    Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel

    75,000 bonus miles
  • Annual Fee

    $395
  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    740-850
    Excellent

Why We Chose It

The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

Pros

  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,300+ lounges, including Capital One Lounges and the Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023