The five pillars behind your Credit Margin Score
Your Credit Margin Score is one number, but it’s built from five parts: how much you save, how much cushion you have, how much you invest, and how much debt pulls you down. Here’s how each pillar works.
Spend Less than you Earn
The gap between income and expenses (your margin). Max at 40% savings rate. The fuel for everything else.
Max at a 40% savings margin (income minus expenses, divided by income).
+125 Pts max
Plan for Emergency
Months of expenses in cash (emergency fund). Max at 6 months. Your safety net so life doesn't push you into debt.
Max at 6 months of expenses in emergency savings.
+125 Pts max
Enjoy life
Sinking funds for life upgrades—vacations, car, wedding. Max at 6 months of expenses. Freedom to spend without guilt.
Max at 6 months of expenses in sinking funds (lifestyle margin).
+75 Pts max
Investing for retirement and growing money
Long-term investments vs. annual expenses. The more you have invested, the more points. Money working for you over time.
Points scale with long-term investments as a multiple of your annual expenses.
+125 Pts max
Debt Friction Drag
Personal debt and mortgage reduce your score. Every dollar of debt is margin you don't control.
Personal debt: −20 pts per month of income in debt (uncapped). Mortgage: −2 pts per month of income in mortgage (max −100 pts).
Subtracts points
These five pillars add up to your score. Improve any one—spend less than you earn, build your safety net, grow investments, or pay down debt—and your Credit Margin Score goes up. See your numbers and get suggestions on the Margin Score calculator. Why margin instead of credit? Credit vs Margin.
Related research
The ideas in this guide are backed by academic and policy research. We organize fundamental studies by Margin Score pillar on our Research page.
View research for these pillars →