What impact does my correct employment and earnings have on my credit rating? I have a good income, but my credit score isn't very high.
Neither your income nor your employer have any impact on your credit scores. You may see a list of previous and current employer names in the identifying information section of your credit report, but your income is not part of your credit report. None of your identifying information, such as your name, address or employer, is included in credit score calculations.
As part of approving a loan application, lenders will typically ask you for your income information and possibly a way to verify it (such as with a recent pay stub). They do so to verify your ability to repay a debt, so will take your income, assets and the fact that you are employed into consideration, along with your credit history and credit scores.
Employment Information on Your Credit Report
The list of employers in your credit report is not meant to be a complete record of your employment history. Instead, the list acts as an additional identity verification tool.
You might not see all of your employers listed because employment is typically only updated when you apply for a new account. When you complete an application, you are usually asked to list your current employer. The lender you are applying with may then report the employer name you provide, along with the other identifying information you provided, to the credit bureaus.
If you have changed jobs since the last time you applied for credit, that new employer information wouldn't be reported to Experian by your current creditors because they wouldn't be aware of the change. Some lenders may choose not to report employer information at all, so it's possible that you see some previous employers listed, but not all of them.
If you feel the employment information listed on your credit report is incorrect, you can dispute it online directly with Experian.
Income Is Not Listed on Your Report
Income is not part of your Experian credit history, and is therefore not included in your Experian credit score. Instead, you provide that information to your lender when you complete a credit application. Your lender can then use the income information you provide when evaluating your ability to repay the debt.
It may sound strange, but the fact is that just because a person has the money to repay a debt doesn't mean they will use it to do so. Lenders try to determine that you have both the ability to repay a debt and the likelihood that you will repay it. The income and asset information you provide with your application helps show that you have the ability to repay the debt. Your credit report and credit scores help determine that you are likely to do so, regardless of your income or other assets.
Why Isn't My Credit Score Higher?
Lenders use credit scores to evaluate the risk of extending credit. Your credit history and your credit scores provide insight into the likelihood that you will repay all your debts on time.
If you are new to using credit and have not yet built a strong credit history, your credit scores won't be as high as they could be. Similarly, if your credit report shows that you've had credit difficulties in the past, your scores will reflect that, even if you have a high income.
The best way to learn what is negatively impacting your credit score is to order your free score from Experian. When you receive your score, it will include a list of the top risk factors currently affecting your creditworthiness. Once you know these factors, you can begin making specific changes to increase your scores.
How Can I Improve My Credit Score?
Although each individual has a unique credit situation, there are some steps anyone can take to begin improving their credit scores right away:
- Make sure all your accounts are current. If you have any accounts that are past due, bringing them current is the first step to rehabilitating your credit. Going forward, be sure to make all payments on time, every time.
- Pay down your credit card balances. Your credit utilization rate, also called your balance-to-limit ratio, is one of the most important factors in your credit scores. Those individuals with the highest credit scores tend to have a utilization rate of less than 10%. Ideally, you should pay revolving credit card balances off in full each month.
- Add your on-time utility payments to your report. Experian Boost®ø allows you to get credit for your positive utility, cellphone and streaming service payments by adding them to your Experian credit report. This can be especially beneficial for those with a thin credit file, and the signup process is free and easy.
Thanks for asking.
Jennifer White, Consumer Education Specialist