Does Income Improve Your Credit Score?

A FICO score ranges from 300 to 850. A higher credit score can lead to lower interest rates and even a new job. A poor credit score can prevent a landlord from renting to you or cause a denial on a credit card application. To get the best score, understand what factors contribute to improving your credit score.

The Score

FICO uses a specific criteria when calculating your score. According to MyFICO, your credit score has five distinct components: 10 percent is the amount of new credit you've applied for recently, 10 percent is the mix of credit types on your report, 15 percent is the length of your credit history, 30 percent of the score is the amount of debt you currently have and the last 35 percent is the payment history on your credit account.

Significance

FICO does not include certain factors in the creation of your score. Your income, or how much money you make, is one of these factors. Your score is based on the information in your credit report. Under the Fair Credit Reporting Act, credit bureaus are not allowed to include your income or salary on your credit report. Your report may contain the name of your employer, if your creditor reports that data to the bureau, but not your salary from that employer. The report also does not include other data that FICO does not consider as predictive of credit risk, such as race, gender or marital status.

Considerations

Income is not a direct factor in the calculation of a credit score, but a steady source of income can play a role in your ability to pay your bills. Lack of income can lead to missed payments. Even one late payment can damage your FICO score by 60 to 110 points, according to Liz Pulliam Weston at MSN Money. Adequate income can also help you use cash from that income to make purchases instead of running up a large credit card bill. Remember, 30 percent of your score is the amount of debt you have.

Prevention/Solution

According to MyFICO, one of the ways to improve your score is to avoid being late on your credit payments, since this factor measures 35 percent of your score. MyFICO also suggests limiting the amount of new credit you obtain and only apply for credit when you need it. You should also keep balances low on all of your credit obligations. The more you pay down debt, the more your score will rise, especially if those payments are on time. The more debt on a credit card, the more of a negative impact it can have on your credit score.