Possible to Have Low Income but High Credit Scores?
Somebody ran my credit recently. This made me very anxious since I had not checked up on myself for a few months and, to be perfectly frank, the economy has affected me as much as anyone and more strongly than most. So the person ran the report as I waited with bated breath, having no idea of what the outcome would be.
It turned out quite well: the result was a most admirable 783. Nobody was more surprised than I. As I said, the atrocious economy has affected my earnings. Actually, that is an understatement. My income is laughable.
When I took a close look at the report, I was able to figure out a few of the reasons that my score was so high in spite of my dramatically lower income over the past few years. Anyone trying to raise their scores should please take this as non-scientific observation, not gospel truth. Do your own research. Without further ado, here are...
The Three Reasons for My Great Credit Scores:
- I have closed many accounts in good standing. Closing accounts while owing nothing on them is kind of like breaking up with a lover without any acrimony. It will not diminish your social status and actually makes you look pretty good to potential new lovers. In the same way, paying off a credit card and closing the account makes you look attractive to other lenders.
- I don't have any 30-day (or more) late payments. This has involved a bit of juggling, but I always take care to pay my bills more or less on time. Even if you need to be a little late, make sure it's just a few days. Stay under that 30-day bar.
- I have big credit lines but only a little bit of debt. I have something like $100,000 in credit available but less than $10,000 in debt outstanding including my car payment. If you always pay your bills on time but don't have any lines of credit -- or if your credit lines are almost maxed out -- it hurts your scores. That's my theory, anyway.
The credit bureaus use very sophisticated algorithms to calculate scores, but maintaining decent scores is not exactly rocket science, as it turns out. Even if the bottom falls out of your income, it is possible to maintain a decent credit rating. Just keep paying the piper more or less on time, and do not borrow unless you absolutely must.
Questions and Answers
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