Credit Card Application: Should You Include your Parent’s Income?
Credit Card Application: Many questions like this have been asked in times pass. Student looking for a quick way in getting his/her own credit card with a little or no income to show for it. Not trying to beat around the bush; but the fact is you can’t include your parents’ income unless they cosign for the credit card.
This is usually not recommended. And we also wouldn’t recommend counting your student loans, because they’re another form of debt — and in most cases they don’t qualify as income.
When applying for a credit card, there are many important factors. One obvious factor is your income. But how does the income element compare to other things considered during the application process, such as a credit score? Below are some basic answers to all your questions asked about getting a credit card.
Why Do Credit Cards Ask for Income on Applications?
Credit card issuers aren’t just trying to snoop; the truth is they’re legally obligated to ask for your income, according to the Credit CARD Act of 2009.
While the law doesn’t indicate a specific income requirement, it does state that banks can only lend you money if they’re confident you can make your monthly payments. And to do that, they need to know how much money you’re earning.
Card issuers are legally obligated to ask for your income, as they can only lend you money if they’re confident you can make your payments. You can include several types of income. A higher income will generally help your approval odds and allow for higher credit limits.
Types of Income You Can Include on Your Credit Card Application
If you’re over 21, you can count any sources of income to which you have “reasonable expectation of access,” including:
Part-time or full-time income
Alimony or child support
Gifts or trust fund payouts
Social Security payments or pensions
Retirement fund payments
Criteria Banks Use to Approve You for a Credit Card
Credit card issuers will each have their own set of criteria when evaluating applicants. But in general, when you apply for a credit card, the following factors are typically considered for approval:
Credit score: While it’s not the only thing considered, your credit score is a big component of whether you’re approved for a new credit card. Credit scores show lenders what kind of risk you could be to them, and they use it as part of an equation to determine how likely you are to pay off your debt.
Delinquencies: If you have late payments listed on your credit reports, it could prevent you from being approved.
Hard inquiries: Hard inquiries can stay on credit reports for around two years. If you have too many hard pulls on your report, it can indicate to lenders you’re in a situation where you need access to funds, but might not be able to pay them back.
Debt: A lender will look at the total amount of credit you are using set against the total amount of credit you have available. It will also consider all debts in total.
Income: If a lender asks you to submit your income, it’s usually a self-reported element, and they will use it to compare against your current debt. This is called the debt-to-income ratio. If you have one area that’s weaker on your credit report, disclosing your income may help make up for it.
Can You Get a Credit Card Without a Job?
Along with stay-at-home parents and spouses, there are other scenarios where someone might not be employed but wonder if they can be approved for a credit card.
For the most part, having a job isn’t a requirement to get a credit card. You can enter your income from the various sources listed above, and if you’re over the age of 21, you can list someone else’s income if you reasonably believe you have access to it.
Another option when you want to get a credit card without a job is to have someone else be a joint account holder. Or, you can ask someone to apply to be the primary cardholder and put you as an authorized user. As an authorized user, you can use the card, but keep in mind you won’t have the same repayment obligation as the primary cardholder.
Using Household Income or Individual Income on a Credit Card Application?
People often wonder whether they should use household income or individual when submitting a credit card application. It’s not uncommon to inflate income and get a higher amount of credit. However, you are always running the risk of not being able to pay it back. Also, if you inflate your income, you may have problems if you were to file for bankruptcy.
If you file for bankruptcy after obtaining debts through false claims, that credit card debt can’t be wiped out. It’s always best to be as accurate as possible when reporting your income to avoid overextending yourself, and it will help to protect you if the need to file for bankruptcy arises.
How to Apply for a Credit Card
Lastly, let’s look at how we can apply for a credit card. There are multiple ways to complete a credit card application: online, using a paper application, or by phone.
Applying for a credit card online is convenient and you can get a decision almost immediately. Whether you apply online, by phone, or by mail with a paper form, the information you’ll need to supply is the same.
First, you’ll need to tell the credit card company a little about yourself. Therefore the application will likely ask for:
Date of birth
Social security number
Physical address and email address
Mother’s maiden name
This information is used to verify your identity and make sure the credit card company has a way to contact you.
Next, you’ll be asked about your annual household income. This is your gross annual income. You’ll also need to tell the credit card company where this income comes from, i.e. employment, self-employment, or unemployment benefits. You may have the option to choose “Other” if your income doesn’t come from any of those sources. For example, if you receive alimony, child support, disability benefits, or veterans’ benefits, all of that could be used as income sources for a credit card application.
Housing Costs and Status
Credit card issuers are also curious about what you spend on housing each month and whether you rent or own. There may be a section on the application where you indicate whether you rent or own, how much you pay for rent or mortgage payments each month and how long you’ve lived there.
If you’d like to add an authorized user to your account, you may have the opportunity to do that when you apply for a credit card. To add an authorized user, you’ll need to fill in their name, address, and date of birth.
Once you’ve completed these fields on the application, you can submit it to the credit card company. Again, if you’re doing this online you should be able to get a decision within a minute or two. If you’re mailing in an application, it could take several weeks to get a response.