Fix Bad Credit - Are you living within your means?
Many people believe that if they had more money, they would not have to worry about credit. This is a misconception. Many people who have money, or at least have all the trappings of money, including cars and nice homes - in fact have terrible credit.
It’s not how much you earn that decides whether you’re a good or bad credit risk but it’s more about how you handle money. You could be earning $8 per hour and still paying your bills and meeting your financial obligations - in which case you’ll have terrific credit.
You could also be earning $500,000 a year and be in terrible debt and financial shape. The best way to ensure that you have a good credit rating, no matter what your income, is to spend less than you earn. That means living below your means. If you have a very small income, you may need to live a lower life style to keep costs down. If you have a medium-sized income, that may mean saving more and entertaining less.
Did you know that income is not a factor in determining your credit score? Although your past and current employers are listed on your credit report - and although lenders may be able to guess your financial status from your loan amounts - your income does not count.
This means that if you won the lottery today or suddenly inherited a large sum of money, your credit score would not rise. With your credit rating, what matters is how you manage your money, not how much you make.
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