Yearly Income

[Anonymous]

Does your yearly income increasing affect your FICO score? As a small business owner my debt ratio has allways been high on my credit reports, however all of my other factors are good. What factor does yearly cliamed income being less than normal for a given amount of debt does affect? Any thoughts on this from anyone would be appreciated.   

[Anonymous]

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@Anonymous wrote:

Does your yearly income increasing affect your FICO score? As a small business owner my debt ratio has allways been high on my credit reports, however all of my other factors are good. What factor does yearly cliamed income being less than normal for a given amount of debt does affect? Any thoughts on this from anyone would be appreciated.

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income as far as i know does not affect your credit score

[haulingthescoreup]

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@Anonymous wrote:

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@Anonymous wrote:

Does your yearly income increasing affect your FICO score? As a small business owner my debt ratio has allways been high on my credit reports, however all of my other factors are good. What factor does yearly cliamed income being less than normal for a given amount of debt does affect? Any thoughts on this from anyone would be appreciated.

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income as far as i know does not affect your credit score

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This is correct. Income is not reported on your credit reports, and therefore there is no way that it can be factored into your scores, which are completely derived from info on your reports.

It does come into play when applying for credit products, such as credit cards, loans, and mortgages.

I think that the ratio that you are seeing on your reports is your utilization ratio, which is the amount owed divided by your credit limit. If two people owed $1000 on a $10,000 credit limit card, and one had an income of $20K/ year and the other had an income of $200K/ year, they would each have a util of 10% on that card.

[Anonymous]

Debt is probably lowering your score. More debt = lower score. Pay off debt = higher score. That's generally how it works with some exceptions. Scores can change daily based on debt balances. Income not factored on FICO score. Inquiries on personal credit lower score.

[Anonymous]

another way to think of it is...yes income is a factor, for if you have high credit card debt aka high utilization, then you are more than likely spending more than you make

Message Edited by Alexandria on 07-26-2008 07:49 PM

[Anonymous]

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@Anonymous wrote:
another way to think of it is...yes income is a factor, for if you have high credit card debt aka high utilization, then you are more than likely spending more than you make

Message Edited by Alexandria on 07-26-2008 07:49 PM

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You'd be surprised how anyone can over spend on any income high and low. More income only means they can either buy bigger ticket items or more of them. Keeping a budget is the same for all. For someone who doesn't have income then yes, income is very important. But I've seen people blow $10,k paychecks just as fast as $200 paychecks. It is frightening! It would take some practice for me to learn how to spend that much money that fast.

[Anonymous]

Income has absolutely no effect on FICO scores.  It does, however, come into play when applying for credit, as the lender needs to know your DTI (debt to income) ratio to determine the ability for you to repay the loan.....