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

Jan 15, 2021

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.

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.

For more TPG news delivered each morning to your inbox, sign up for our daily newsletter.

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.

(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 photo by Westend61 / Getty Images.

Delta SkyMiles® Platinum American Express Card

Earn 90,000 bonus miles after you spend $3,000 in purchases on your new Card in your first 3 months. Offer ends 8/3/2022.

With Status Boost™, earn 10,000 Medallion Qualification Miles (MQMs) after you spend $25,000 in purchases on your Card in a calendar year, up to two times per year getting you closer to Medallion Status. Earn 3X Miles on Delta purchases and purchases made directly with hotels, 2X Miles at restaurants and at U.S. supermarkets and earn 1X Mile on all other eligible purchases. Terms Apply.

Apply Now
More Things to Know
  • Limited Time Offer: Earn 90,000 bonus miles after you spend $3,000 in purchases on your new Card in your first 3 months. Offer ends 8/3/2022.
  • Earn up to 20,000 Medallion® Qualification Miles (MQMs) with Status Boost® per year. After you spend $25,000 in purchases on your Card in a calendar year, you can earn 10,000 MQMs up to two times per year, getting you closer to Medallion® Status. MQMs are used to determine Medallion® Status and are different than miles you earn toward flights.
  • Earn 3X Miles on Delta purchases and purchases made directly with hotels.
  • Earn 2X Miles at restaurants worldwide including takeout and delivery in the U.S., and at U.S. supermarkets.
  • Earn 1X Miles on all other eligible purchases.
  • Receive a Domestic Main Cabin round-trip companion certificate each year upon renewal of your Card. Payment of the government imposed taxes and fees of no more than $80 for roundtrip domestic flights (for itineraries with up to four flight segments) is required. Baggage charges and other restrictions apply. See terms and conditions for details.
  • Enjoy your first checked bag free on Delta flights.
  • Fee Credit for Global Entry or TSA PreCheck® after you apply through any Authorized Enrollment Provider. If approved for Global Entry, at no additional charge, you will receive access to TSA PreCheck.
  • Enjoy an exclusive rate of $39 per person per visit to enter the Delta Sky Club® for you and up to two guests when traveling on a Delta flight.
  • No Foreign Transaction Fees.
  • $250 Annual Fee.
  • Terms Apply.
  • See Rates & Fees
Regular APR
17.24%-26.24% Variable
Annual Fee
Balance Transfer Fee
Recommended Credit
Terms and restrictions apply. See rates & fees.

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.