How Your Income Affects Credit Card Applications

Opening a credit card is a money move that plants you firmly in adulthood. Suddenly, you can build your credit score, make larger purchases, and possibly even earn rewards.

Whether it’s your first or fifth card, opening a new credit card requires an application. Credit card companies will ask you to provide information about your income, which can cause some anxiety if you’re unemployed, earning minimum wage, or a full-time student.

If the notion of providing an annual income estimate is putting you off from applying for a new credit card, don’t worry. You may be surprised by what credit card companies consider to be a part of an annual income. We’ve answered the most common questions about how income affects your chances of getting a credit card below.

Why Do Credit Card Companies Check Income?

Major credit card companies like Capital One, American Express, Discover, and Chase, require potential cardholders to provide their income in order to approve a credit application. This isn’t to be exclusive but is rather an effort to protect consumers from racking up debt on excessively high lines of credit.

In fact, credit card companies are required by law to inquire about your income to determine whether you can take on a certain amount of credit card debt. This requirement is laid out in the Credit Card Accountability Responsibility and Disclosure Act of 2009, also known as the CARD Act.

The CARD Act was passed amid the Great Recession to prevent lenders from preying on consumers by issuing credit lines outside of reasonable income standards. Of course, this doesn’t mean people don’t rack up debt they can’t afford on credit cards. But the credit card act prevents credit card issuers from handing out high lines of credit to people who can’t afford them.


Income is only part of the personal finance equation when qualifying for a credit card. Lenders also look at debt-to-income ratios or DTI. Your debt-to-income ratio shows how much money you have vs. how much you owe. You are more likely to be accepted if you have less debt in relation to your income.

So, how much debt is too much debt? The Consumer Financial Protection Bureau (CFPB) suggests that consumers have a DTI of 43% or less to qualify for a mortgage, so this can give you a general idea of a good credit card ratio.

To calculate your DTI ratio, start by adding up your monthly payments, also known as debts. This includes rent, mortgage payments, student loans, child support, alimony, etc. Then, divide this amount by your total monthly income and multiply by 100. This number should give you an idea of how much of your income you spend on your monthly debts.

Credit Card Income Requirements

Credit card companies typically don’t disclose a raw figure for how much income you should have to qualify. That is because lenders usually want to see that your DTI ratio is good before issuing you a line of credit.

However, just like DTI ratios and credit scores, there is an ideal income threshold that you should reach to be an ideal candidate.

You should have an annual income of $39,000 or more for a single individual. If you are married or have a partner with whom you share expenses, you should have a combined personal income of at least $63,000.

While this number will vary depending on the card and the company, these are the numbers that most companies like to see on credit applications.

Types of Income You Can Report on Your Application

When you think of income, you typically think of the money you receive from an employer. But a lender’s definition of income is actually much broader than that.

The Consumer Financial Protection Bureau (CFPB) defines what a bank or lender can count as income for credit card applications under the Comment for 1026.51 Ability to Pay. They state that the ability to make minimum payments is defined by current or reasonably expected income.

In short, income is any money you can reasonably expect in the future, such as salaries, wages, commissions, or social security. However, this definition can vary depending on your age.

If you’re under 21 years of age:

If you’re 18, 19, or 20, you will only be able to list independent income, which doesn’t include any income your parents make. Income that you can report on a credit application includes:

  • Personal income, including wages or regular allowances.
  • Scholarships or grants.

There currently aren’t any rules or guidelines regarding calculating and reporting irregular income on a credit application. The general rule of thumb is you should only report income that tax returns or official documents, like pay stubs, can verify.

If you’re 21 years of age or older:

If you are 21 or older, you can list any income sources to which you have “reasonable expectation of access.” Again, this means that you expect to receive these income sources regularly for the foreseeable future.

This includes:

  • Salary or wages
  • Retirement fund payments
  • Investment income
  • Gifts or trust payments
  • Alimony
  • Child support

The stipulation of “reasonable expectation of access” also applies to a spouse’s income. If you plan to use your spouse as a co-signer, you can list their income so long as their paycheck is deposited into a shared bank account.

What Doesn’t Count As Income?

Not all sources of income count towards your annual income when you’re submitting a credit card application. You should not list these forms of income on your application:

  • Loans or borrowed funds
  • Lottery winnings
  • Non-cash assistance, like vouchers or subsidies
  • Unemployment compensation

How Do Credit Card Companies Verify Your Income?

You listed your income on your credit card application, but how do credit card companies verify your income? Credit card issuers and other credit lenders typically ask you to provide proof of income. This can be as simple as providing your most recent pay stubs or bank statements.

Some creditors may use other methods of verifying your income, such as income modeling or financial reviews. Income modeling algorithms allow lenders to estimate your income based on your credit report.

Creditors will typically use income modeling information to estimate how much available credit to give to borrowers.

Financial reviews are another way that creditors check your income. This can involve providing tax returns or other financial documents to prove your income. If you cannot provide this information, the lender may lower your credit limits or even close your account. However, financial reviews tend to be rare because they are expensive to conduct.

What Happens If Your Income is Off?

Most people have more than one source of income. It can be difficult to know exactly how much money you have coming in at any given time, so some people may worry about misreporting their income on a credit card application.

If you report your income in good faith, it usually isn’t a big deal if you are slightly off. However, you definitely should not lie about your income on a credit card application. Lying about your income on an application for credit can land you in court on fraud charges. The maximum penalty for fraud on a credit application is a $1 million fine or 30 years in prison.

Frequently Asked Questions

How does my credit score impact my chances of getting a credit card?

Your credit score is determined by credit bureaus, such as Experian, and informs current and future lenders of your overall credit history. A credit card company will order a copy of your credit report before issuing you a credit card. If you have bad credit, you will have a more difficult time qualifying for a credit card account or credit limit increases.

What are the consequences of lying about your income on a credit card application?

Lying on a credit application can lead to fraud charges with maximum penalties of a $1 million fine or up to 30 years imprisonment.

Will the best credit cards require a high income?

The most exclusive credit cards may not necessarily require the highest income, but they may require higher credit scores and lower DTI ratios.

Can I get better credit card rates with a high credit score?

You can qualify for higher credit limits and better credit card offers if you have high income or high DTI. If you don’t qualify for credit card approval on your own, a co-signer can help you reach the threshold.

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