Income and Credit Scoring

There is a widely held belief that credit scores are highly correlated with income both in the academic literature and media articles. However, Credit Reporting Agencies (CRAs), such as Experian, TransUnion, and Equifax maintain that income is not a factor in determining one’s credit score. This disparity in public opinion and the CRAs’ assurance on the matter is problematic and previous attempts at investigating the relationship between credit scores and income have proven unfruitful due to very limited data on the matter. Given our access to a unique proprietary dataset which includes both an individual consumer’s incomes and credit score, we seek to investigate this relationship.