Does Income and Employment Affect Your Credit Score?

Have you been temporarily laid off or furloughed? Has your income been reduced? Concerned about your credit? If so, here is information you need to know.

First, neither income nor employment are part of your credit file. The credit bureaus do not know if you are a minimum wage employee or a millionaire. They don’t know if you are working full-time, part-time, or not at all.

It is illegal to base credit on income, because that would discriminate against the poor. But beyond that, why would they care? Think about it.

Visa and MasterCard don’t care what your income is; they only care that you pay them on time, per your agreement.

If you make $2,000 per month and are debt-free, using your two credit cards as a convenience only, always paying the balance in full at each billing, you will  have a top tier credit score.

If you make $10,000 per month and have two automobile loans, have six credit cards that carry high balances (over 50 percent of the limit), and you missed a payment in the past year, then your credit score will be sub-par.

What If You Are Going Through Financial Crisis?

If you are unable to keep up with all your payments  due to the economic turndown from the pandemic, here is your priority:

  1. Pay your mortgage on time first and foremost. Mortgage lenders do not allow a partial payment. If you cannot pay in full, call the phone number on your billing statement and ask what type of plan they offer. Depending on who owns your mortgage, there are different options available. Whatever you do, don’t just stop paying.
  2.  If you cannot afford your auto payment, do not do voluntary repossession. There is no grace for turning in your car voluntarily. It will ruin your credit and you will still be liable to pay the difference between what you owe and what they sell it for at auction. A voluntary repo is exactly the same as a forced repo. Don’t do it!
    Instead, drive your car into the dealership and trade down for a used vehicle that either has a lower, affordable payment or no payment at all.
  3.  Credit cards are the lowest and last priority. If you cannot make the minimum payment, call and ask for a plan in writing. A verbal agreement by a representative on the phone means nothing. You must protect your credit by getting the agreement in writing.

Why Not Repair Your Credit Now?

If you have some time, why not pick up a copy of this guide that has helped so many people get their credit back on track? Just yesterday, a book reader emailed me and said, “Thank you for changing my life!”

No matter where you are now, you have the power to take control of your future. Put the mistakes of the past behind you and build a credit profile you can feel proud of. Others have done it, and you can, too!

Keep safe and God bless you on your journey.


8 thoughts on “Does Income and Employment Affect Your Credit Score?

  1. Thanks Carolyn ,,always good to receive these knowledgable and informative emails from you ,,Hope you and your family are staying healthy and well through this crisis!! Todd Barker…

    On Wed, Apr 15, 2020, 11:02 AM Ask Carolyn Warren wrote:

    > askcarolynwarren posted: “Have you been temporarily laid off or > furloughed? Has your income been reduced? Concerned about your credit? If > so, here is information you need to know. First, neither income nor > employment are part of your credit file. The credit bureaus do not know if” >

  2. Could you please address a question I haven’t seen anywhere else: If people take advantage of a credit issuer’s offer to defer payments during the pandemic, does this affect a credit score in any way? For example, my daughter has elected to defer her car payment for two months. Could this come back and hurt her later? Thank you for this informative blog.

    1. Jennifer, that is an important question! The only way to know that the auto creditor is not going to report her payments as late (for not being “paid as agreed”) is for her to get it in writing. Just because someone told her she could defer two payments, she cannot assume she won’t be reported as late. There has been a bill introduced for credit scores not to be docked during this time, but I have not yet seen that the bill has been passed into law. I surely hope they are not reporting your daughter’s deferment as late payments, but I have no way of knowing without seeing a written agreement. I would like to know what their response is when she asks for the Deferment Agreement.

      1. Belated follow-up to this. She did not get it in writing, even though the lender’s website said the request for deferral had been approved. Today she found out that she has been reported as 60 days late to credit bureaus. When she called the lender, they told her that was their policy, and she would continue to be reported as past due until the account was up to date. The company is Capital One, by the way.

  3. Hi,

    Do you have any idea if the bill was passed to remove negative items from your report. I live in Texas, it was to change from 7 years to 4 years.

    Sent from my iPhone


  4. Sheila, the credit bureaus can report negative information for 7 years (some items for 10 years). I think you might be referring to the Statute of Limitations in Texas, which is the time a creditor can collect money on an unpaid bill or collection.

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