Lying on an application for a credit card may sound like a harmless way to a higher credit limit or get a better credit card. Yet, the fact remains, it’s illegal and could have serious consequences.
Before credit card companies make a decision about you as a potential customer, they use the application form details to determine your creditworthiness. They also create the most appropriate amount of credit to give.
This type of information includes your employment position, incomings and outgoings, and your previous history of debt repayment.
They will view your credit file and other information to assess the risk you pose to them. And also make a decision about whether to grant your application.
What Happens if You Lie on a Credit Card Application?
A credit card application requires you to provide various forms of financial and personal information. This includes salary, employment status, and details of your monthly outgoings. So how can deliberately providing false information affect you?
One of the main parts of a credit card company’s due diligence process when assessing your suitability is to check your credit file. All your current and outstanding debts are listed in this credit report, so if you lie, it will be obvious to the provider.
Being unemployed means you are not eligible for a ‘standard’ credit card, so you might be tempted to lie about your employment status on an application form.
The problem is that if your application is successful, you are likely to face unmanageable debt very quickly, even if you are in receipt of state benefits.
Credit card companies do not offer cards to anyone under the age of 18, and some are reluctant to offer credit to people over 65. As your date of birth is included in your credit file, providers can quickly check this information.
Using someone else’s details on your credit card application is identity theft, carrying with it hefty financial penalties and potential prosecution for fraud.
Even if it is done with the other person’s knowledge, it is a serious issue that will affect other areas of your life.
This is How it Will Affect You if You’re Caught
Best case scenario — your application is declined and you’re flagged for future applications at the provider. At worst? You could pay up to $1 million in fines and serve up to 30 years in prison. Not worth it.
Can you be Convicted of Fraud?
This mostly depends on the severity of the lie and the situation. In most cases, you won’t be fined for $1 million or serve up to 30 years in prison.
However, lying on your credit card application is considered fraud, and because of that, you can be convicted.
Setting Yourself Up for Failure
Another reason that you don’t want to lie on a credit card application, beyond the simple fact that doing so is illegal, is that lying on the application is like setting yourself up for failure.
You may be tempted to lie because you don’t think you’ll get approved for a credit card. You might also lie because you want to get a higher credit limit.
In either case, you might be hurting yourself more than you’re helping.
More credit than you can handle
Lenders have incredibly well-tuned application review systems. They can estimate exactly how large a credit limit you can manage, and the odds that you’ll pay back your debts.
Given the lenders’ experience with lending, they probably have a better idea of how large a loan you can handle than you do. If you lie on an application and wind up with a credit line that is larger than you can manage on your true income, you’re far more likely to fall into debt.
You might be entirely unable to pay your way out of that debt. The credit limit that the lender gives you limits your risk in the same way it limits the lender’s risk.
Getting a higher credit limit simply increases the amount of debt you can get into.
Credit cards are big business. As many as 43 percent of Americans apply for a credit card every year, which means card issuers receive hundreds of thousands of applications every day.
Can they really tell if you lie on your application?
The truth is:
Usually, they can tell. Card issuers receive far too many applications to be able to get each one so carefully. Generally, you’ll only be required to provide proof of your income when you apply for a huge loan, like a mortgage.
Still, it’s a bad idea to lie on a credit card application, even if the odds of getting caught are low.
Random Income Inquiries
Many card issuers will ask random applicants to provide proof of their income during the application process.
American Express has become known to run financial reviews on customers who set off certain red flags, locking accounts until the cardholder provides proof of income and other documentation.
Even if you can get away with it, the penalties for getting caught are so strict, and the benefit so small, that it isn’t worth it.
Getting Caught in Bankruptcy
The most common way of getting caught committing loan application fraud is by. Declaring bankruptcy. If you get a credit limit you can’t handle, fall deep into debt, and are unable to pay your loans back, you might have to file for bankruptcy.
It’s at this point that your lenders will come after you to find out why you were unable to pay back a loan they approve. You’ll be forced to provide documentation surrounding your income, assets, and debts in the lead-up to your bankruptcy.
If fraud is discovered, you’ll wind up in even worse trouble.
Lying on your credit card application is illegal and you could get fined and end up in jail. Instead, be honest on your application.
If a credit card is out of your reach, consider applying for a credit card that’s closer to your financial situation.
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