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hegemony

Does a Higher Income Mean a Higher FICO Score?

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Almost one-quarter of consumers believe that a higher income equals a higher FICO score. Do you agree?

 

:swoon:

 

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There's no question that higher income correlates to a higher credit score.  When the population is segmented by income, average FICO's increase as income increases.  But, as noted, "correlation doesn't equal causation".

 

It's common sense that once one has income to reliably handle basic necessities, and has at least a modest stockpile of savings to deal with emergencies, that an individual is less likely to be delinquent on bills.

 

Still, income isn't a factor that determines FICO.  As such, "higher income doesn't equal higher FICO".  Personal credit habits (past delinquencies, utilization, frequency of credit apps, number of new accounts, etc) are stronger delinquency predictors than income.

 

 

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2 hours ago, hdporter said:

There's no question that higher income correlates to a higher credit score.  When the population is segmented by income, average FICO's increase as income increases.  But, as noted, "correlation doesn't equal causation".

 

It's common sense that once one has income to reliably handle basic necessities, and has at least a modest stockpile of savings to deal with emergencies, that an individual is less likely to be delinquent on bills.

 

Still, income isn't a factor that determines FICO.  As such, "higher income doesn't equal higher FICO".  Personal credit habits (past delinquencies, utilization, frequency of credit apps, number of new accounts, etc) are stronger delinquency predictors than income.

 

 

Sometimes.

 

I had a 7 figure annual income back when my credit score was in the low 500's. At the time I just bought everything, car, home, etc. for cash and had no idea what a credit score or report even was. Debit card for everything. My credit reports when I eventually got them looked like that of a complete deadbeat. No CLs. No old closed CLs., just collection accounts. Creditors, which were from services like phone/cable service didn't even bother calling me. I hadn't paid them because I had no idea there was even a debt. When I moved I gave the USPO a forwarding address but didn't know at the time the home I bought was in a place where the post office didn't deliver mail to a physical address and you had to have a POB. While I then got the POB I didn't file another forwarding instruction so all mail was just returned as undeliverable.

 

Then I had my debit card cloned by a fraudster so didn't even have a debit card for a few weeks. Other times I had to jump through hoops renting a car or getting a hotel room. I had no idea that having a credit card was a kind of proxy that you wouldn't flee a room w/o paying or junk a car and leave the rental holding the bag.

 

Then I wised up.

 

Credit reports and credit scores are very limited. But it's what is used. Don't ignore them.

 

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I agree. While income isn't computed in FICO, a person who is swimming in money is less likely to have trouble paying bills on time than someone who is broke/working paycheck to paycheck.

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18 hours ago, Burgerwars said:

I agree. While income isn't computed in FICO, a person who is swimming in money is less likely to have trouble paying bills on time than someone who is broke/working paycheck to paycheck.

That's certainly true, but only for people that actually use credit. When you have lots of money in the bank and think debit cards are the cat's meow, you can have a pretty bad credit report. At best you don't have any credit accounts and a blank credit report. And even a single negative on an otherwise blank report makes you pretty unattractive to CC issuers outside of, perhaps, issuers like First Premier. Yuck.

 

I was lucky and did some research when I concluded that it was really desirable to have a CC when car rentals would look askance at me with just a debit card. I knew that CCs charged them more than the debit card issuers. It didn't make sense. A bit of research on debit cards v credit cards made me see the light and I came here.

 

Then came enlightenment.

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Quote

It's possible for someone who makes $25,000 a year to have a higher credit score than someone who makes $125,000 per year. The key is to use credit responsibly...

This^^^

 

Period.

 

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15 hours ago, creditmaze said:

For me income determines CL's and CL increases which may effect credit scores.

not here. I have a lot more in "available" than my annual individual income.

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On 4/9/2019 at 1:33 AM, Burgerwars said:

I agree. While income isn't computed in FICO, a person who is swimming in money is less likely to have trouble paying bills on time than someone who is broke/working paycheck to paycheck.

It is not the issue of 'having trouble paying' that gets people in trouble who have good amounts of disposable income.  Rather, it is the lackadaisical attitudes...sitting at a desk to make payments just isn't a priority.  Or, alternately, the travels get in the way...

 

Occasionally, the lates will be due to the personal assistant having failed to make the payment in a timely manner, figuring that a few days late simply wasn't a big deal. 

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It is not the issue of 'having trouble paying' that gets people in trouble who have good amounts of disposable income.  Rather, it is the lackadaisical attitudes...sitting at a desk to make payments just isn't a priority.  Or, alternately, the travels get in the way...

 

Good point. I have been guilty of it a few times. But, auto pay helps.

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Posted (edited)
On ‎4‎/‎10‎/‎2019 at 11:42 AM, hegemony said:

not here. I have a lot more in "available" than my annual individual income.

How about a little proper context here Hege.....

 

Your spouse is the breadwinner by a significant margin.

Edited by Rogue

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11 hours ago, Rogue said:

How about a little proper context here Hege.....

 

Your spouse is the breadwinner by a significant margin.

HHI is about the same as my individual "available"

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