What to put as income on a student credit card application – Forbes Advisor

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Find the best student credit cards of 2021

Getting a credit card while attending college full time is a great way to start building credit. Even if students do not have gainful employment, they can use other forms of income in their credit card application, such as family bank deposits or financial aid leftovers.

Students must be at least 18 years old to be eligible for a credit card.

Why is income required on a credit card application?

Credit card issuers typically require income information on a new application. Issuers often look at disposable income – what is left over after someone pays expenses like rent or utility bills. Disposable income helps issuers determine what the applicant’s credit card limit will be and whether the cardholder will be able to make payments on time.

It is common for full-time students to have no income or minimal income from part-time employment. So what should a student put on a credit card application for income?

What counts as income?

Students can list actual earnings from a job if they have one. In addition to income from work, regular allowances or bank deposits received from parents or family may be included in income. As long as the monthly bank statements prove income, they are valid as income on a credit card application. Remaining financial aid (after paying tuition and college fees) may also count towards the income of a credit card application.

Make sure you add up all the potential income received and enter it into the credit card application. Students may be required to provide documents to prove their income, such as pay stubs, bank statements, or financial aid records.

How Much Income Do Students Need to Qualify for a Credit Card?

Technically, there is no minimum income required to obtain a credit card. A student’s disposable income could be as low as $ 100 and they would still have the option of being approved for a credit card.

Higher incomes generally give applicants a better chance of getting a card approved and a higher credit limit. Don’t lie about the income on a credit card application. Putting false information on a credit card application is fraud and can result in jail time or heavy fines.

What to do if you don’t get approved for a credit card

Some students without a credit history may have difficulty obtaining a credit card. Credit card issuers review an applicant’s credit history, but younger students usually have no history to analyze. They need a first credit card to build a line of credit for future loans and major purchases. Fortunately, there are alternatives for students to build a credit history if a credit card issuer denies an application.

  • Apply for a student credit card. Student credit cards are designed to help students get their first credit card. Issuers may have lower expectations for key application information such as revenue. Some do not have an annual fee and offer the option of increasing the line of credit over time as long as payments are made on time.
  • Apply for a secure credit card. Secured credit cards are approved for a predetermined amount of cash prepaid by the cardholder. The initial payment becomes the credit limit of the card. Cardholders can begin to build a positive credit history by using the card to make purchases and pay off their monthly balances. Keep in mind that purchases can still be charged with interest if the balance is not paid monthly. The cash amount will be returned to the cardholder once their account is closed.
  • Become an authorized user. Parents or other family members can add someone as an authorized user to credit card accounts. This is a great way for students to build on someone’s good credit history to start building their own. Be sure to ask the issuer first if they are reporting authorized user activity to the credit bureaus.
  • Have a co-signer sign the application. Having a parent or other responsible family member co-sign a credit card application can be one way to make approval more likely. As long as the co-signer has decent credit and pays their bills on time, it increases the chances of student approval. Many banks do not allow co-signers on credit card applications.

Final result

Students can list actual income from employment, regular bank deposits from family members, or remaining financial aid as income on a credit card application. Make sure you are honest about the income on an application. Creating or faking the truth about any information is fraud and can result in jail time or heavy fines. If a student receives a credit card denial, they can try again using a co-signer on their application. Alternatively, students can apply for secure credit cards, student credit cards, or become an authorized user on a family member’s account in order to start building their own credit history.

Find the best student credit cards of 2021


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How to report income on your credit card application – Forbes Advisor

Editorial Note: Forbes Advisor may earn a commission on sales made from partner links on this page, but this does not affect the opinions or ratings of our editors.

If you are applying for a credit card, you will be asked for your income. For some people, such as a single person who has only one paid job, this is a simple question. However, for a lot of people it gets more complicated. Income can take many forms: salary, wages, tips, dividends, or payments from others. In addition, many people do not work outside the home or depend on the income of a spouse or partner. What do they have to report as income?

If answering the income question on a loan application is a source of anxiety, read on to learn more about why banks ask this question, what income can count, and general guidelines to consider. account when applying for credit.

What banks count as income

The source of truth about what banks may consider income for the purposes of credit card applications can be found in the Consumer Financial Protection Bureau’s official interpretation of 12 CFR Part 1026, particularly in its commentary for 1026.51 Ability To Pay .

The regulations set out requirements for how banks should consider income and assets when issuing credit cards or credit card increases and give specific examples of the types of income that can be taken. taken into account when granting credit.

What this means for banks is that they must take into account a consumer’s ability to make minimum payments when granting credit and that this ability to make minimum payments can be based on the current or reasonably expected income. The CFPB recognizes that income comes in many forms and takes this into account when advising banks on what to expect.

Payments that matter

Most of the payments you receive directly can be considered income. This includes employment income, including full-time, part-time, seasonal, temporary, military and self-employed income. It also includes income from things like investments, annuities, or retirement benefits. Here are some examples of payments that count as income:

  • Salary and salary
  • Payment premium
  • Tips
  • Commissions
  • Interest and dividends
  • Retirement benefits
  • Public assistance
  • Separate alimony, child support and maintenance payments

In addition, banks are able to take into account both current income and reasonably expected income. For example, if you were recently laid off but plan to return to work, you can report your past earnings if you have a reasonable expectation that this number represents your future earnings.

Alimony and child support income

Many banks have language in credit card applications such as “Alimony, child support, or separate maintenance income need not be disclosed if you do not want it to be considered a basis for repayment of this obligation. “

This language means that you can choose not to include these payments. The intention is to allow credit card applicants to exclude income that may already be allocated to a person’s basic support. If your reported income decreases because these types of payments are not included, you may be eligible for a lower line of credit.

Payments that don’t count

While most of the payments you receive can be counted as income, the exception to this rule is if you receive payments that you do not have access to. For example, if you entered wages for student loan debts, tax debts, child support, or alimony, these would not be included in income.

Money you can access can count

In addition to your direct income, the CFPB allows credit card issuers to take into account third party income to which an applicant has access. This rule is intended to allow people who do not work outside the home, in particular home spouses and spouses who depend on the income of a spouse or working spouse, to access credit. If you have access to another person’s income, in some cases you can count that person’s salary as income for the purposes of a credit application.

For example, if you share a joint account with another person and that person’s salary is regularly deposited into that joint account, you may consider those deposits to be part of your income. Additionally, if a state or local law grants you a property right over another person’s income, you can usually use that person’s income when reporting income on a credit card application.

Also, if someone else gives you periodic payments or pays your expenses regularly, you can count those amounts as income on credit applications. For example, if you have a sublet roommate from you who makes direct payments to your landlord against your rental obligation, you can consider those payments as income on your loan application.

Special rules for children under 21

The Consumer Financial Protection Bureau imposes special limits for banks issuing loans to people under the age of 21. According to office rules, borrowers under 21 must have the independent ability to make required minimum payments or have a co-signer who is 21 or older. and who agrees to become responsible for the debt on the account.

This usually means that a person under the age of 21 cannot count the income of other people to whom they may have access when reporting income on a credit card application.

The credit card application will guide you

It is important to note that the regulations covering the types of income that can be taken into account when granting credit are regulations that apply to banks, not to individual consumers.

When you apply for a loan, the bank will tell you what income to declare on the application. Here is an example from a Citibank credit card application:

Total annual income:

Examples: Salary, salary, interest, dividends, rental income, pension benefits. If you are 21 or older, you can include other people’s income that you can reasonably access to pay your bills.

You are not required to include alimony, child support, or separate maintenance income if you do not want it to be seen as a basis for repaying this obligation.

As long as you make a good faith effort to report your income accurately according to the bank’s guidelines, you will be fine.

Consequences of incorrect income declaration

It can be tempting to over-report your income. After all, a lot of income can mean a bigger line of credit. However, this is a bad idea and can have serious consequences. The bank that issued your credit card uses your income information to estimate your ability to pay and only give you the amount of credit it thinks it can repay. Having the ability to spend far beyond your means can cause financial problems for many people.

Additionally, if a credit card issuer finds that there is something unusual about your spending habits, they may ask you to undergo a financial review. A financial review often involves submitting documents, such as recent pay stubs or a tax transcript, so that a lender can verify your reported income. If you decline to participate in a financial review or if your financial review reveals that your income was significantly different from what you stated, the credit card issuer can use it as a basis for reducing your lines of credit, you deny future credit or close your accounts.

While rare, lying about your income can have consequences beyond closed accounts. This could include civil penalties and adverse actions if you file for bankruptcy and seek discharge from your debts. In the most extreme cases, lying about your income could land you in jail.

Final result

When reporting your income on the credit card application, the best advice is to follow the instructions given on the credit card application and remember these three rules:

  • Be honest. Remember that false income tax returns can have consequences ranging from adverse actions like lowering credit limits to criminal penalties.
  • Declare the income to which you have access. Report your salary and payment income and report your spouse’s or partner’s income if it is deposited into a joint account to which you have access.
  • Don’t overthink it. No one is asking you to indicate exactly on which line your adjusted gross income will appear on next year’s tax return. All that the credit card application takes is your best estimate of your current income or what you expect from your income.

Making a good faith effort to accurately report your income on a credit card application will ensure that your bank is able to properly assess your application and that you will receive a line of credit that matches your ability to pay.


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How to report income on your credit card application – Forbes Advisor

Editorial Note: Forbes Advisor may earn a commission on sales made from partner links on this page, but this does not affect the opinions or ratings of our editors.

If you are applying for a credit card, you will be asked for your income. For some people, such as a single person who has only one paid job, this is a simple question. However, for a lot of people it gets more complicated. Income can take many forms: salary, wages, tips, dividends, or payments from others. In addition, many people do not work outside the home or depend on the income of a spouse or partner. What do they have to report as income?

If answering the income question in a credit application is a source of anxiety, read on to learn more about why banks ask this question, how much income can count, and general guidelines to consider. account when applying for credit.

What banks count as income

The source of truth about what banks may consider income for the purposes of credit card applications can be found in the Consumer Financial Protection Bureau’s official interpretation of 12 CFR Part 1026, particularly in its commentary for 1026.51 Ability To Pay .

The regulations set out requirements for how banks should consider income and assets when issuing credit cards or credit card increases and give specific examples of the types of income that can be taken. taken into account when granting credit.

What this means for banks is that they must take into account a consumer’s ability to make minimum payments when granting credit and that this ability to make minimum payments can be based on the current or reasonably expected income. The CFPB recognizes that income comes in many forms and takes this into account when advising banks on what to expect.

Payments that matter

Most of the payments you receive directly can be considered income. This includes employment income, including full-time, part-time, seasonal, temporary, military and self-employed income. It also includes income from things like investments, annuities, or retirement benefits. Here are some examples of payments that count as income:

  • Salary and salary
  • Payment premium
  • Tips
  • Commissions
  • Interest and dividends
  • Retirement benefits
  • Public assistance
  • Separate alimony, child support and maintenance payments

In addition, banks are able to take into account both current income and reasonably expected income. For example, if you were recently laid off but plan to return to work, you can report your past earnings if you have a reasonable expectation that this number represents your future earnings.

Alimony and child support income

Many banks have language in credit card applications such as “Alimony, child support, or separate maintenance income need not be disclosed if you do not want it to be considered a basis for repayment of this obligation. “

This language means that you can choose not to include these payments. The intention is to allow credit card applicants to exclude income that may already be allocated to a person’s basic support. If your reported income decreases because these types of payments are not included, you may be eligible for a lower line of credit.

Payments that don’t count

While most of the payments you receive can be counted as income, the exception to this rule is if you receive payments that you do not have access to. For example, if you entered wages for student loan debts, tax debts, child support, or alimony, these would not be included in income.

Money you can access can count

In addition to your direct income, the CFPB allows credit card issuers to take into account third party income to which an applicant has access. This rule aims to allow people who do not work outside the home, in particular spouses at home and spouses who depend on the income of a working spouse or partner, to access credit. If you have access to another person’s income, in some cases you can count that person’s salary as income for the purposes of a credit application.

For example, if you share a joint account with another person and that person’s salary is regularly deposited into that joint account, you may consider those deposits to be part of your income. Additionally, if a state or local law grants you a stake in another person’s income, you can usually use that person’s income when reporting income on a credit card application.

Also, if someone else gives you periodic payments or pays your expenses regularly, you can count those amounts as income on credit applications. For example, if you have a sublet roommate from you who makes direct payments to your landlord against your rental obligation, you can consider those payments as income on your loan application.

Special rules for children under 21

The Consumer Financial Protection Bureau imposes special limits for banks issuing loans to people under the age of 21. According to the bureau’s rules, borrowers under 21 must have the independent ability to make the required minimum payments or have a co-signer who is 21 or older. and who agrees to become responsible for the debt on the account.

This usually means that a person under the age of 21 cannot count the income of other people to whom they may have access when reporting income on a credit card application.

The credit card application will guide you

It is important to note that the regulations covering the types of income that can be taken into account when granting credit are regulations that apply to banks, not to individual consumers.

When you apply for a loan, the bank will tell you what income to declare on the application. Here’s an example from a Citibank credit card app:

Total annual income:

Examples: Salary, salary, interest, dividends, rental income, pension benefits. If you are 21 or older, you can include other people’s income that you can reasonably access to pay your bills.

You are not required to include alimony, child support, or separate maintenance income if you do not want it to be seen as a basis for repaying this obligation.

As long as you make a good faith effort to report your income accurately according to the bank’s guidelines, you will be fine.

Consequences of incorrect income declaration

It can be tempting to over-report your income. After all, a lot of income can mean a bigger line of credit. However, this is a bad idea and can have serious consequences. The bank that issued your credit card uses your income information to estimate your ability to pay and only give you the amount of credit it thinks it can repay. Having the ability to spend far beyond your means can cause financial problems for many people.

Additionally, if a credit card issuer finds that there is something unusual about your spending habits, they may ask you to undergo a financial review. A financial review often involves submitting documents, such as recent pay stubs or a tax transcript, so that a lender can verify your reported income. If you decline to participate in a financial review or if your financial review reveals that your income was significantly different from what you stated, the credit card issuer can use it as a basis for reducing your lines of credit, you deny future credit or close your accounts.

While rare, lying about your income can have consequences beyond closed accounts. This could include civil penalties and adverse actions if you file for bankruptcy and seek discharge from your debts. In the most extreme cases, lying about your income could land you in jail.

Final result

When reporting your income on the credit card application, the best advice is to follow the instructions given on the credit card application and remember these three rules:

  • Be honest. Remember that false income tax returns can have consequences ranging from adverse actions like lowering credit limits to criminal penalties.
  • Declare the income to which you have access. Report your salary and payment income and report your spouse’s or partner’s income if it is deposited into a joint account to which you have access.
  • Don’t overthink it. No one is asking you to indicate exactly on which line your adjusted gross income will appear on next year’s tax return. All that the credit card application takes is your best estimate of your current income or what you expect from your income.

Making a good faith effort to accurately show your income on a credit card application will ensure that your bank is able to properly assess your application and that you will receive a line of credit that matches your ability to pay.


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Your credit card application may be rejected for these 5 reasons

Credit card application: The credit card has become a part of everyday man’s life today. The advantages of a credit card are numerous. You can pay for your purchases or other bills up to a certain limit using a credit card. Your credit score improves every time you pay your credit card bills on time. This allows you to easily get a loan from the bank. Thanks to this, you can also buy any item on EMI.

There are a few things to keep in mind if you are applying for a credit card. Banks take a lot of things into account before accepting or rejecting a credit card application. Know the reasons why a credit card application may be rejected.

If you change jobs quickly

  • Changing jobs frequently is seen as a sign of an unstable career. Therefore, it is not suitable for your credit card application.
  • Giving credit cards to people who change jobs frequently is considered a bit risky.

Small salary

  • The bank examines the applicant’s repayment capacity before issuing the credit card.
  • The bank can ask the applicant for Form 16 or the payslip to verify it.
  • If the applicant’s annual income does not fall within the limit set by the bank, the application may be canceled.

Limit exceeded

  • If this is your first time taking a card, don’t get caught up in the excessive limit cycle. This may result in the cancellation of your request.
  • For the first time using a basic card, no annual fee, the credit card will suit you.
  • Create a good credit history with your first card, then apply for a premium card.

Bad credit rating

  • A bad credit rating is also a major reason for rejecting credit card applications.
  • If you’ve defaulted on one of your loans or are frequently late paying off IMEs, your credit score is ruined.

Don’t apply too many times

  • Banks or non-bank financial institutions (NBFCs) can check the applicant’s credit history.
  • Even if you have applied for multiple cards at multiple banks, your application tends to be rejected.


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How I convinced Chase to reconsider my credit card application

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Coming out of college for my first full-time job, one of my financial goals was to get my own credit card.

I had a credit card before when my mom had the foresight to open a joint credit card when I started college – with her as a co-owner – to help me build my credit. After four years of responsible use, I had a credit rating by the mid-700s.

After combing through the NextAdvisor credit card reviews, I set my sights on the Chase Freedom Unlimited for its generous cash back in categories I knew I would use, with no annual fees and a generous bonus. ‘introduction.

I applied online and was quickly turned down.

The online form did not provide any details and I had to wait several days to receive a letter in the mail explaining the decision.

I turned to Kendall Little, senior writer and resident credit card expert at NextAdvisor, for advice. “Call Chase and ask them for details and appeal the decision,” Kendall told me. “At the very least, you will better understand why you were turned down,” she explained.

I called Chase’s customer service and politely explained my situation, then asked if they could tell me why my application was rejected. The representative gave me several reasons, two of which occurred to me:

  1. The total available line of credit – the maximum amount I could borrow – on my current joint credit card was too low.
  2. I had too many recently opened loan accounts (I had taken out student loans the previous semester).

Chase’s representative suggested that I submit a request for reconsideration. I have provided information about my current employer, salary, work history, and reasons for wanting the Chase Freedom Unlimited card.

After a few more steps to verify my identity, I received a welcome package for the Chase Freedom Unlimited card in the mail.

All in all, the whole process took about four weeks and a surprising amount of work. In addition to discovering the power of a polite phone call to customer service, here are five lessons I learned from that experience.

1. The credit score used by lenders may be different from what you see

Instead of paying a fee to check my credit score, I used my bank’s free credit score report service, which uses FICO scores from TransUnion. I thought I had a good credit score within the recommended range for the Chase Freedom Unlimited card.

However, when I received the decision letter from Chase, the score listed was almost 20 points lower than my bank reported. According to the letter, Chase used its own proprietary scoring system and data from Equifax. While it seems my credit rating was not the tipping point for the decision, the significant difference still surprised me.

The lesson I learned from this is that scores can vary depending on where you get them. Just because you’re in the recommended score range doesn’t mean you’re guaranteed to get a certain card.

2. It takes more than one-off payments to create credit

Even taking the spread into account, my credit rating was still rated as good to very good by most standards. However, the decision letter listed several factors other than my credit rating as grounds for refusal, including too low a line of credit on my current joint card and too many recently opened accounts.

For a long time, I assumed that paying your bills on time and in full was enough. It’s true that your credit score plays a major role in credit applications, and payment history is the biggest part of calculating your credit score. But I should have taken into account all the other factors that could affect my credit application.

Looking back, I could have paid more attention to my credit utilization rate – the amount borrowed divided by the total credit available. Recommended credit usage is less than 30%, and because I had a low line of credit with my previous card, my normal spending sometimes pushed me over the threshold.

I would also have liked to have spaced the timing of my credit card application so that it didn’t come so soon after taking out my student loans, as lenders view newly opened credit accounts as risky.

3. Your current line of credit may affect your future credit applications.

What surprised me the most was the impact my line of credit on my existing joint credit card had on my application. Your line of credit itself is not taken into account in calculating your credit score, only your credit utilization rate. I haven’t spent a lot on my card, so I never bothered to ask for an increase on the $ 500 line of credit I started with.

After several years of making payments on time, I probably would have been entitled to an increase in my line of credit if I had requested one. If I had known that my line of credit would affect my future card applications, I would have done the extra work to request an increase in my line of credit.

4. Be patient and apply strategically

After being turned down, I immediately started looking for other options. However, I refrained from applying as I didn’t want new credit applications to further hurt my credit score. Fortunately, I convinced Chase to reconsider my candidacy. But even if I had been rejected a second time, it would have been better to wait until the case was completely closed before trying elsewhere.

Even though things worked out in the end, I probably could have saved some time and hassle by requesting a card with simpler requirements. While it’s good to research which cards offer the best rewards and benefits, I’ve learned that it’s also important to have realistic expectations and strategically apply for the cards you have the best chance of qualifying for. .

Pro tip

While regularly monitor your credit rating is always a good idea, keep in mind that the credit score you check may not match that of lenders.

5. It is important to create credit early

One thing I did well – thanks to my mom – was create credit early. Looking back, I’m thankful my mom helped me get this joint credit card before I saw the need for it. Having an existing credit history allowed me to choose high value rewards cards for my first independent credit card.

For all parents, I recommend adding your teenager as an authorized user on your credit card or opening a joint credit card together. Teach them how to use it properly as soon as they are old enough to take responsibility. University students and young adults who want a card independent of their parents may consider applying for secure cards and student cards specifically designed to help people with no credit history build credit.

Why I chose Chase Freedom Unlimited

When I did my initial research to decide which credit card I should get, I had two other competitors besides Chase Freedom Unlimited: the Citi® Double Cash Card * and the Capital One SavorOne Cash Rewards Credit Card *. While all three are highly rated cash back cards with no annual fee – my most important consideration – I ended up going with the Chase Freedom Unlimited for two reasons:

  • Introductory bonus: Unlike the Citi Double Cash card, the Chase Freedom Unlimited card came with an introductory bonus of $ 200 after spending $ 500 on purchases in the first three months after opening the account. Even though the Citi Double Cash Card had a higher overall base cash back percentage (2% vs. 1.5%, not including additional reward categories), it would take $ 40,000 in spend for the difference to cash back exceeds the value of the introductory bonus – far more than I would spend in a year.
  • Categories of expenses: My biggest monthly expense besides rent and utilities is food. The Chase Freedom Unlimited Card and Capital One SavorOne both offer an introductory bonus of $ 200 and 3% cash back on restaurant meals. The Chase Freedom Unlimited offers 5% cash back on grocery store purchases (excluding Target® or Walmart® purchases) up to $ 12,000 spent in the first year, cash back $ 1.00 5% on all purchases and the Capital One SavorOne offers 3% cash back. on grocery stores (excluding superstores like Walmart® and Target®) and 1% cash back on other purchases. While I normally enjoy cooking, part of my plan to meet the $ 500 bonus spending requirement was to eat more in restaurants. I knew my food budget for the next three months would include more take out than groceries, so I assessed the cashback categories accordingly.
  • Introductory bonus:
  • Annual subscription :

    $ 0

  • Regular APR:

    14.99% – 23.74% Variable

  • Recommended credit:

    670-850 (good to excellent)

  • Learn more external link icon on the secure site of our partner.
  • Introductory bonus:

    N / A

  • Annual subscription :

    $ 0

  • Regular APR:

    13.99% – 23.99% (Variable)

  • Recommended credit:

    670-850 (good to excellent)

  • Learn more external link icon on the secure site of our partner.
  • Introductory bonus:
  • Annual subscription :

    $ 0

  • Regular APR:

    15.49% – 25.49% (variable)

  • Recommended credit:

    670-850 (good to excellent)

  • Learn more external link icon on the secure site of our partner.

Of course, I made these decisions based on my personal financial situation and goals – as a young man in my twenties living independently with no big purchases on the horizon and no reason to spend money. for anything other than necessary. For someone who has more opportunities to spend – for example, someone who takes care of an entire family – a higher cash back rate may be more beneficial than an introductory bonus. Likewise, if you are spending more in certain categories, it is worth choosing a card that offers category-specific cash back bonuses.

* All Citi Double Cash card and Capital One SavorOne Cash Rewards credit card information has been collected independently by NextAdvisor and has not been reviewed by the issuer.


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