Established Member
bobkelly
Posts: 51
Registered: ‎06-25-2007
Income doesn't matter to FICO!
Can anyone explain why one's income has no bearing on a FICO score?  Seems to me that this plays a big part in creditworthiness, yet FICO doesn't use income (or net worth) as part of their formula in creating a FICO score.
Frequent Contributor
andyaycw
Posts: 298
Registered: ‎07-25-2007
Re: Income doesn't matter to FICO!
FICO doesn't care whether you're a multi-millionaire or someone who makes a dime a year.

FICO is an indicator of how capable, how likely you are of paying back money you borrow.

*A multi-millionaire asks me for $100 and I give it to him, but he doesn't pay me back.
*A hobo on the street asks me for $100 and I give it to him, but he pays me back.

I would rather lend the hobo money in future, rather than the multi-millionaire.

Starting Score: EQ 773, TU 766
Current Score: EX 794, EQ 787, TU 776
Goal Score: 800


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Frequent Contributor
andyaycw
Posts: 298
Registered: ‎07-25-2007
Re: Income doesn't matter to FICO!
On another note, sure it's more likely that the multi-millionaire is more capable of repaying the money, but the bottom line is that income does not have a correlation to whether the person will pay on time.

All people care about is whether or not they're gonna get paid back if they loan you money.

Starting Score: EQ 773, TU 766
Current Score: EX 794, EQ 787, TU 776
Goal Score: 800


Take the FICO Fitness Challenge
Senior Contributor
ilovepizza
Posts: 3,071
Registered: ‎05-17-2007
Re: Income doesn't matter to FICO!
Because anyone can spend beyond their limits. Higher income just means they can spend more. It's all about learning control and responsibility.
If we never set higher goals we would never get as far.
sol, credit 101, acr, abbreviations, calc
Valued Contributor
TheNewWorldMan
Posts: 2,374
Registered: ‎03-15-2007
Re: Income doesn't matter to FICO!


bobkelly wrote:
Can anyone explain why one's income has no bearing on a FICO score? Seems to me that this plays a big part in creditworthiness, yet FICO doesn't use income (or net worth) as part of their formula in creating a FICO score.





Does having a Ferrari make one a better driver than owning a Hyundai?

More income doesn't necessarily make you a better money manager. Ask Michael Jackson.
- - - -
in a credit-scoring postnuclear Stone Age...
Regular Contributor
javi84
Posts: 171
Registered: ‎05-18-2007
Re: Income doesn't matter to FICO!

Does having a Ferrari make one a better driver than owning a Hyundai?

More income doesn't necessarily make you a better money manager. Ask Michael Jackson.


Or ask any rapper :smileyhappy:
For age and want, save while you may; no morning sun lasts a whole day.
--Benjamin Franklin
Senior Contributor
ilovepizza
Posts: 3,071
Registered: ‎05-17-2007
Re: Income doesn't matter to FICO!


TheNewWorldMan wrote:


bobkelly wrote:
Can anyone explain why one's income has no bearing on a FICO score? Seems to me that this plays a big part in creditworthiness, yet FICO doesn't use income (or net worth) as part of their formula in creating a FICO score.





Does having a Ferrari make one a better driver than owning a Hyundai?

More income doesn't necessarily make you a better money manager. Ask Michael Jackson.


I would think yes. Have you ever tried to dodge a raccoon at 110 on a Hyundai. Much easier in a Ferrari. :smileyhappy: Sorry a little humor.
If we never set higher goals we would never get as far.
sol, credit 101, acr, abbreviations, calc
New Member
atlantaman
Posts: 1
Registered: ‎06-06-2007
Re: Income doesn't matter to FICO!
ask any rapper?
Senior Contributor
ilovepizza
Posts: 3,071
Registered: ‎05-17-2007
Re: Income doesn't matter to FICO!


atlantaman wrote:
ask any rapper?



Professionals in the rap music industry. Millions in income, terrible credit, bankruptcies, but lots and lots of income. lol.
If we never set higher goals we would never get as far.
sol, credit 101, acr, abbreviations, calc
Mega Contributor
RobertEG
Posts: 17,828
Registered: ‎03-19-2007
Re: Income doesn't matter to FICO!
I think it is being a bit naive to state that income has no relationshop to ability tp pay debt... it certanly does.  Paying requires both abiliity and willingness. I think a primary reason why income is not included in FICO scores is due more to the fact that income data is something that they simply do not have the ability to collect and update regularly.  Just try to secure a home loan without disclosure of income, and you will realize that it does count.  FICO is thus not an overall measure of try credit worthiness, but more simply a historical snapshot of how you have paid debt in the fairly recent past.