Is It Possible To Have a Low Income And a High Credit Score

There’s a misconception that low-income people are bound to raise a bad credit score. People with high incomes may have an easier time maintaining their credit, but people with low incomes can also beat the odds and build a good credit score if they manage their finances wisely. How much you earn doesn’t affect your credit. How you handle your debts and money impacts your credit score. This article will show how low-income people can build and maintain a good credit score by focusing on the aspects that affect their score the most.

Salary vs. income

The words are used interchangeably, but there’s a big difference between them which plays a significant role, especially among people with low income; your salary is what you earn from your full-time job. It could be a 9-5 job or a full-time job with a fixed salary. Income refers to the total earnings from different sources. This is of significance because people with low incomes tend to have multiple side gigs.

When applying for a loan with a low income, ensure you include all your income sources and not just your salary. Your salary and income don’t directly affect your credit score. But it affects your ability to pay your debts. Having more income can assure lenders that you can repay on time.  Even if you’re only earning a $30k yearly salary, what matters is whether you have a good payment history. 

What factors affect your credit score?

Different lenders consider different types of credit scores. When you apply for a credit score, lenders tend to check your FICO score, which can be anything between 300 to 850. Five factors affect your FICO score:

  • Credit mix takes up 10% of your FICO
  • Payment owed is 30% of your score
  • Payment history is 35% of your score
  • Credit history length is 15% of your credit score
  • New credit is 10% of your credit score

So overall, how much debt you have, how much of it you have already repaid, how old your credit history is, and how much new credit you are raking up can affect your FICO score. You need to keep a check on your debts and repayments closely if you want to maintain a good score. Your income only plays a minor role, while how you handle your financial obligations over a long period will determine your credit.

Debt-to-income ratio

The debt-to-income ratio is how much you earn compared to how much it goes into your debts. Having a lower debt-to-income ratio is seen favorably by lenders. If most of your income goes into paying off your debts, lenders will see you as a credit risk who will probably default on new or even multiple loans. This will mean they will either reject your loan application or charge you high-interest rates. Some may make you sign something as collateral in case of secured loans.

The debt-to-income ratio doesn’t directly impact your credit score, but lenders will be wary of approving the loan request for people with high debt-to-income ratios. Here are some ways to maintain or improve your DTI ratio:

1. Pay off your smaller loans first to close the credit accounts. Smaller loans will be easier to pay off in total, and once paid, your debt history will have one less debt to show.

2. Don’t overuse your credit cards. Use just what you truly need and leave the rest untouched.


People with low-paying jobs are always on the lookout for better opportunities. Better rates and hours aren’t always possible, though. Even with a small income, you can build a high credit score by closely monitoring your debts and financial spending habits. We hope this article helps you in understanding how you can maintain a good credit score with a low income

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