October 8, 2006

Credit Reporting Quiz # 2

True or False?

The more income that you make, the higher your credit score.

The answer is false.

Income is not a determining factor in the calculation of your credit score. In a nutshell, your credit score is primarily calculated by looking at the ratio of your debts to your maximum credit limit, and how you pay your bills. There are people with high incomes, that have bad credit because they are not paying their bills on time.

Your income, however, will become an important factor when you apply for a loan, and the amount of credit that a lender will let you borrow.