Does Empower Affect Your Credit Score?

How Empower May Affect Your Credit Score

While many of Empower's core features won't touch your credit score, certain products can. Understanding how these specific offerings interact with credit bureaus is key to managing your financial health effectively.

1. Applying for a Credit Product: The process often begins when you apply for a credit-based product, such as the Empower Thrive line of credit. This may result in a hard inquiry on your credit report, which can temporarily lower your score.
2. Building a Payment History: Once approved, your repayment activity is typically reported to the major credit bureaus. Consistently making on-time payments is a powerful way to build a positive credit history, a significant component of your score.
3. Managing Credit Utilization: How much of your available credit you use—your credit utilization ratio—also plays a role. Keeping this ratio low is generally favorable for your credit score, demonstrating responsible credit management to lenders.
4. Increasing Credit Age: Over the long term, maintaining an account in good standing contributes to the average age of your credit accounts. A longer credit history is generally viewed positively by scoring models.

How Much Will Empower Affect Your Credit Score?

The actual effect Empower has on your credit score depends on how you manage your account and other financial activities. Here are a few key things to consider:

• On-time payments. Making timely payments on your Empower Card can positively impact your credit history. Lenders view consistent, on-time payments favorably when calculating your score.
• Credit utilization. Your balance compared to your credit limit creates a credit utilization ratio. Keeping this ratio low is a significant factor in maintaining a healthy credit score.
• Hard inquiries. Applying for the Empower Card will likely result in a hard inquiry on your credit report. This may cause a temporary and minor dip in your credit score.

How You Can Avoid Empower Affecting Your Credit Score

Understand Inquiry Types

Empower's cash advance feature typically uses a soft inquiry, which won't harm your credit score. However, other services might require a hard pull. Always clarify the type of credit check involved before proceeding with any new feature to avoid an unexpected impact on your credit.

Use Core Features Only

To be safe, stick to Empower's primary features like cash advances and budgeting tools, which are designed not to affect your credit. Be cautious when exploring additional offerings, as these are more likely to trigger a hard credit inquiry from a partner lender.

Ways to Improve Your Credit Score

Your credit score is not set in stone; it's a dynamic number that can always be improved with consistent, positive financial habits. An expert guide suggests that most people see meaningful changes within three to six months by taking the right steps.

• Monitor your credit reports regularly. Obtain your free reports from the three major bureaus and dispute any inaccuracies you find, as errors can negatively impact your score.
• Set up automatic bill payments. Your payment history is the most significant factor in your score, so automating payments ensures you never miss a due date.
• Lower your credit utilization ratio. Aim to use less than 30% of your available credit, as high balances can signal financial distress to lenders.
• Become an authorized user. You can be added to the credit card of someone with a strong credit history, allowing their positive habits to reflect on your report.
• Diversify your credit mix. Lenders like to see that you can responsibly manage different types of credit, such as a mix of credit cards and installment loans.
• Limit new credit applications. Applying for too much credit in a short time results in multiple hard inquiries, which can temporarily lower your score.

The Bottom Line

Empower's cash advances and other features generally do not affect your credit score, as the company does not report your payment history to the three major credit bureaus.

Frequently Asked Questions

Does Empower report my Cash Advance activity to credit bureaus?

No, Empower does not report your Cash Advance usage to the three major credit bureaus, so it won't directly build or harm your credit history.

Can using Empower indirectly help my credit score?

Yes. By helping you avoid overdraft fees or high-interest payday loans, Empower can support your overall financial stability, which is beneficial for your credit long-term.

Will checking my eligibility for an Empower Cash Advance affect my credit?

No, checking your eligibility for a Cash Advance with Empower does not involve a hard credit inquiry, so it will have no impact on your credit score.