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10 tips for great credit on an inconsistent income

Lucy Lazarony
  • Banking
  • 6 minute read

You don’t have a steady, routine paycheck? Your credit doesn’t have to suffer. Follow these 10 tips to get and maintain a great credit score on a variable income.

1. Master your budget.

When you are living on a variable income, having a firm budget is essential.


Add up all your fixed expenses, bills that must be paid each month. And then add in variable expenses such as food and gas, insurance, taxes, hair cuts, and any bill you pay from time to time that is not a fixed monthly expense. This total amount is the absolute minimum your variable income job needs to provide each month.

“One of the challenges is being able to manage a stable budget,” says Bruce McClary, vice president of public relations for National Foundation for Credit Counseling. “One month you could be making $3,000 and the next month you could be making $1,000.”

2. Live below your means.

Because your monthly income fluctuates, it is very important to live below the amount you take home each month.

“You want to set a standard of living well within the maximum amount you can make,” McClary says. “You have to set your standard of living a little lower so you can get through the lean months.”

3. Set aside money for variable expenses.

Having a great month? Pump that extra money into savings. So when your variable bills come due, such as a big tax bill or car insurance premium, you’ll have plenty of cash in reserve to pay for them.

You also may wish to pay ahead on routine expenses such as utility bills during high-income months.


“You can double up on utility bills,” McClary says. “It’s great when that bill comes in and you’ve got a credit.”

4. Set up a bill paying system.

“Making payments on-time is critical, because that’s the single most important factor in people’s credit scores,” McClary explains. “Make sure you know when all bills come due.”

Automate bills when you can and set up payment reminders by text, email and using the calendar in your smartphone.

5. Have backup savings for lean months.

No matter what you do, there can be months when income dips.

Maintaining a savings account with money to cover a month’s worth of living expenses can be such a budget-saver when you’re on a variable income.

“Set aside at least one month’s worth of your minimum expenses aside in a ‘variable fund,'” recommends Anna Sergunina, a financial planner at MainStreet Financial Planning, Inc., in Burlingame, Calif. “This will be helpful in case you don’t earn at least the minimum one month.”

This variable fund should get you through a lean month and you can replenish the account during a more profitable month.

6. Establish a “curveball” savings account.

Beyond lean income months, it is also smart to build up an emergency fund, what Sergunina calls “a curveball savings account.”

“Let’s say your car breaks down. That’s a curveball that life throws at you,” Sergunina says. “It’s really an unexpected expense. Maybe you lost your job. What if you were sick for three months?”

She recommends tucking away three to six months of living expenses into savings for life’s curveballs.

7. Use two checking accounts.

Sergunina also recommends having two checking accounts one for fixed expenses and one for variable expenses. She uses this method herself. Both she and her husband make variable incomes.

“It helps me not worry about paying the bills,” Sergunina says.

She makes a point of paying all her fixed expenses bills by the 15th of each month.

“I make sure my fixed bills are covered. And then whatever money is left over, I use for variable expenses,” Sergunina explains.

8. Use credit cards with caution.

To build excellent credit, minimize credit card charges.

“Always keep balances at less than 10 percent of the available credit limit,” says Becky House, education and communications director for American Financial Solutions.

Charging a small routine bill to a credit card and then paying the bill in full each month is a good approach to building credit.

“As long as you are paying off what’s charged as quickly as possible, that’s fine,” McClary says. “If you’re paying it off on time, it’s good for your budget and a boost to your credit score.”

Consider accessing additional funds through personal loans, rather than credit cards, when possible.

9. Invoice yourself.

Sergunina recommends sending yourself a monthly invoice for savings. That way you should never fall behind or forget about your saving goals.

“Pay yourself first. ‘Saving’ should be one of your expenses. Send yourself an invoice once per month and treat it like a regular bill you have to pay,” Sergunina says.

10. Check your credit score and monitor your credit reports.

Protect your great credit by checking in on your credit reports.

“Definitely check your credit report at the very minimum one time a year that people are entitled to through AnnualCreditReport.com,” House advises.

“Check all the credit reports. Is everything correct? Look at the accounts themselves. Do you recognize all the accounts?”

Also verify the accuracy of your name and the places you’ve lived. Wrong information could be an error or a sign of fraud or identity theft.

House also suggests reviewing your credit score prior to making a major purchase. You can check your credit score even more frequently than that, with WisePiggy’s free credit score. Visit WisePiggy each month to see how you’re progressing on your credit score.

Maintain good credit

It takes discipline to live on a “lean month” salary during times when cash is flowing, but you may be glad you used restraint when cash flow becomes a trickle.