5 ms·

I keep seeing this repeated as if a person with low income can't have a good credit score. That isn't true. It's possible to curb one's spending of money they

I keep seeing this repeated as if a person with low income can't have a good credit score. That isn't true. It's possible to curb one's spending of money they don't have, regardless of your income. And then you get an excellent credit score. Source: my own experiences with credit

paulgb 3y ago
I don't mean to say that a low income person absolutely can't have good credit, but that it's likely to be correlated due to how the system works. For example, a creditor will ask your income before extending credit to you. The more unused credit you have available to you, all else being equal, the better your credit score. So that's at least one reason to expect that they are correlated.
donmcronald 3y ago
> It's possible to curb one's spending of money they don't have, regardless of your income. It would cost me +$100 to get a rewards card. At 1% back I'd need to spend $10k per year on a rewards card to break even. So, if you curb your spending, you're subsidizing those wealthier than you that are spending $10k+ per year on their credit card. Source: I subsidize rich people's rewards cards and don't like it.
- bombcar 3y ago
  Some rewards cards are free, but maybe you need to spend the $100 on something else? If you have good/decent credit some offer signup bonuses.
- brewdad 3y ago
  I have 3 different rewards cards that pay me cash and are all free.I do pay a fee for one additional card but it provides perks that are worth that fee to me.
- refurb 3y ago
  There are a ton of rewards cards with no annual fee at all.
supertrope 3y ago
Redistribution from those with low FICO scores to those with high FICO scores is a stronger effect than re-distribution from low income to high income people. https://www.federalreserve.gov/econres/feds/files/2023007pap.pdf https://www.federalreserve.gov/econres/feds/files/2023007pap...

paulgb 3y ago

I don't mean to say that a low income person absolutely can't have good credit, but that it's likely to be correlated due to how the system works. For example, a creditor will ask your income before extending credit to you. The more unused credit you have available to you, all else being equal, the better your credit score. So that's at least one reason to expect that they are correlated.

donmcronald 3y ago

> It's possible to curb one's spending of money they don't have, regardless of your income. It would cost me +$100 to get a rewards card. At 1% back I'd need to spend $10k per year on a rewards card to break even. So, if you curb your spending, you're subsidizing those wealthier than you that are spending $10k+ per year on their credit card. Source: I subsidize rich people's rewards cards and don't like it.

bombcar 3y ago
Some rewards cards are free, but maybe you need to spend the $100 on something else? If you have good/decent credit some offer signup bonuses.
brewdad 3y ago
I have 3 different rewards cards that pay me cash and are all free.I do pay a fee for one additional card but it provides perks that are worth that fee to me.
refurb 3y ago
There are a ton of rewards cards with no annual fee at all.

supertrope 3y ago

Redistribution from those with low FICO scores to those with high FICO scores is a stronger effect than re-distribution from low income to high income people. https://www.federalreserve.gov/econres/feds/files/2023007pap.pdf https://www.federalreserve.gov/econres/feds/files/2023007pap...