Does Your Income Affect Your Credit Score?
Credit scores are stubborn and enigmatic things. As soon as you miss a payment on a credit card or buy now pay later (BNPL) installment plan, your credit score gets lower. Meanwhile, when you have been paying your rent, utilities, and BNPL payments on time, your credit score does not budge? This can only mean that your credit score does not tell the whole story about your financial situation. It is frustrating to wait for your credit score to improve while you are doing everything right as far as paying your bills, especially if you have recently got a raise at work or a salaried job after a series of unpredictable gigs. A Boca Raton credit repair lawyer can help you increase your chances of qualifying for the loans you need.
Your Income History Does Not Affect Your Credit Score, but It Does Influence Your Ability to Qualify for a Loan
Your credit score reflects your history of borrowing and repayment, but your credit report does not include personal data such as your age, gender, marital status, or whether you are receiving public benefits. The things that give your credit score the biggest and fastest boost are repayment of secured and unsecured debts such as auto loans and credit cards. Every time you make a payment on your credit card, home mortgage, or car loan, your credit score gets a little bit higher. Missing a payment or running up a bigger credit card balance will lower your credit score, and so will bankruptcy filings and defaulting on debts.
Your credit report does not include your income history, but both your credit score and your income play a role in determining whether lenders will lend to you and how much they will charge you in interest and fees. Your debt-to-income ratio is a factor in lending decisions, so increasing your income is always a good idea, even if you still carry a heavy debt burden.
How to Get the Biggest Creditworthiness Boost Out of a Recent Increase in Income
A pay raise will not give you an instant credit score makeover; how you use your newfound good fortune influences how quickly it improves your creditworthiness. If your main goal is to improve your credit score overall, the best way to use your extra income is to pay down your debts. If your goal is to get the lowest possible monthly payments on an auto loan, you should save up for a few months, while still keeping up with the minimum payments on your existing debts, and then put as big a down payment as possible toward the purchase of the car. If your income increase is big enough that you can afford to pursue both goals at the same time, then you should do it.
Contact a South Florida Debt Lawyer About Dealing With Low Credit Scores
A South Florida debt lawyer can help you raise your credit score or qualify for loans even if your credit score is slow to increase. Contact Nowack & Olson, PLLC in Boca Raton, Florida to discuss your case.