Average Credit Score by Income
Your income isn’t factored into your credit score calculation, either, but a November 2020 analysis from the Federal Reserve Bank of New York found the higher the income level, the higher the average credit score.5 That corroborated a 2018 Federal Reserve study that found how much you earn may have a “moderate correlation” to your credit score.6 The chart below shows results of the New York Fed’s analysis, which defined its income tiers in relation to U.S. median household income, with “low income” being less than 80% of the median income for the nearest metropolitan area. The national average median household income for 2021 was $70,784, according to the Federal Reserve Bank of St. Louis.7
Average Credit Score by Income5
||Average Credit Score
Like age and location, income bears no direct impact on your credit score, but the two factors still seem to be related. Why? One possible reason is that lower income may result in a lower ability to pay debts consistently, while higher income may result in a stronger payment history. Of course, this varies according to personal expenses and total levels of debt. But someone with a $100,000 salary may be more able to pay back $15,000 in credit card debt than someone with a $30,000 salary.
Credit utilization ratio also plays a factor here. Credit card issuers might look at your income when determining your credit limit, so the higher your income, the more likely you’ll be approved for a higher credit limit. When you have a high credit limit, it can be easier to keep your credit utilization ratio under 30%, which can positively affect your credit score.
Still, it’s important to remember that despite the correlation between average credit score and income, you don’t need to earn a lot in order to build an excellent credit score. Financial responsibility takes precedence. So as long as you spend mindfully – and always pay your bills on time – you are more likely to establish and maintain great credit.