Why Higher Income Doesn’t Always Mean a Higher Credit Score


Imagine you’re faced with the task of predicting the financial security of two people. First, an individual earning minimum wage, with 3 dependents, and living in an expensive city. In comparison, the other is a millionaire living in a mansion in the hills. Equipped with a lifetime of funds they don’t seem to have a financial worry in sight.

If you had to guess who has a better credit score, would you have any idea? Low or high, depending on their personal circumstances?

The truth is, a higher wage does not indicate a higher credit score.


An article recently posted to MoneyTalksNews examined the relationship between high earnings and high credit scores and the verdict was definite: more money does not automatically mean better scores.

Though it can feel like those with a larger paycheck have it all figured out, having more money doesn’t necessarily translate into financial savvy. Everyone is susceptible to the ups and downs of financial turbulence regardless of wealth. Ultimately, it’s the choices you make with your money – as opposed to your net worth – that impacts your progress towards financial security.

When compared side by side, someone who makes minimum wage, pays their credit card on time every time, and takes measures to track that they’re not spending beyond their means could very well have a higher credit score than someone with a higher income who isn’t taking the same calculated steps. A late payment on a Corvette or Tesla is still a late payment.

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More wealth does not a higher credit score make…

Even those with enough money to pay off all monthly bills aren’t exempt from forgetting to make a payment or making financial choices that negatively impacts their credit. And because credit depends on so many different factors, income is only a small part of the equation. Regardless of income, you can benefit from taking measures to protect your credit and build a solid financial foundation. Tracking your score, understanding the impact of opening and closing credit card accounts, and keeping a healthy debt/credit ratio are all important ways to maintain your score.

… but (and isn’t there always a but) it can help

There are some instances where a higher income can be beneficial to your credit. If you earn more, you’re more likely to be approved for a higher line of credit. The benefit? Lenders sometimes see a higher credit line as proof of greater financial security. This can be a double edged sword, however, if a higher line of credit ultimately prompts a higher line of debt. At the end of the day, good financial choices and habits are more valuable than wealth alone.

Waiting for a higher salary to make financial changes?

If you’ve held back from cultivating good financial habits due to your financial circumstances, there’s no reason to feel limited. You have the power to make a positive change and you can start utilizing that power as soon as now.  If you’re looking to increase your credit score, you can start out by getting your free credit report and using tools and resources to help you out from there. Forming good financial habits is the real “wealth” in this situation.

It’s important to remember that everyone’s financial experience is unique. Good financial habits such as regularly checking in with your statements and progress, understanding the impact of interest, or researching what happens if you suddenly close a credit card, will help you to establish a secure relationship with your money. As a result, you’ll have a better read on your finances and a perspective that will empower you as you to work towards a stable financial future.

Image Credit: Tracy O

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