Let’s assume that my credit score is an average of 680 between the three companies, based in part on my income to debt ratio, among other things. Not particularly a stellar number, but not the worst either. Let’s also assume that all obligations are paid as agreed and always on time. Assuming that everything stays the same except for income, will my score go up if I start receiving a higher income, like doubling it? And if so, any idea how much?
If nothing changes other then income, as in, all that extra money just starts piling up at home (or in a savings account) or you spend it right away, then no. The credit bureaus have no idea how much you make nor how much you have in your checking accounts savings accounts, under your mattress, how much your house is worth etc…
In accounting terms, everyone has two numbers. How much they owe (debt) and how much they have (assets). All the credit bureaus care about is how much you owe.
Now, having said that, in theory, if you double your income, you would pay down some of your debt.
ETA, I see your mistake. In your first line you mentioned your income to debt ratio. They don’t know that. They know your debt to credit limit ratio. That is, they know what you owe, compared to how much you could owe.
I get the feeling you just rented an apartment. Apartment managers look at your income to debt ratio since it’s important to them as part of the lease application process.
Nope. I have rented the same house for over 15 years. What prompted the question was the fact that I will be starting to get Soc. Sec. in Feb. in addition to my work income and I just wondered if the extra income would have an effect on my score.
I don’t have a cite on the following, but it seems to be valid as far as my score goes. Every month you meet your obligations, your scores go up by 3 points. That came from a discussion with a banker.
Joey already covered the credit limit vs credit balance thing.
This may be of interest. It gives a little bit of a breakdown.
http://www.money-zine.com/Financial-Planning/Debt-Consolidation/National-Average-Credit-Score/
Also, something else to add. Assuming everything stays the same. That is, you owe the same exact amount on all your cards, the same amount on all other debts, everything is current etc… One thing is still changing (which Morgenstern alluded to), each month is another month that you have in good standing. Length of credit is important in figuring your credit score. But that’s not the key question here, the big question is income, but like I said, income in and of itself doesn’t play into your credit score unless you use said income to reduce your debt.