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TPG reader Anandi sent me a message on Facebook to ask about getting a new credit card:
Among the many factors that can affect your credit application, your income (and specifically your debt-to-income ratio) is one of the most important. Naturally, card issuers are more likely to loan you money if they think you can pay it back, so reporting a higher income will increase your chances of being approved. Fortunately, you may be able to include income on an application beyond what you earn personally.
The rules have changed several times over the past decade, thanks to the CARD Act of 2009 and later amendments made by the Consumer Financial Protection Bureau (CFPB) in 2013. The law says that if you’re 21 or older, then credit card issuers may take income from a spouse or partner into account, so long as you have a reasonable expectation of accessing it in order to meet your financial obligations. (If you’re under 21, then you can only report your own personal income.)
Basically, this allows lenders to look at your complete financial picture, which makes a lot of sense. If you earn $20,000 annually, and you share finances with your spouse who earns $80,000, then you’re more creditworthy than an individual who earns $50,000 (assuming all else is equal). Reporting a combined income of $100,000 represents your ability to repay more accurately than reporting an income of $20,000.
Some credit cards make it clear that you can include income from other people on your application. For example, the Chase Sapphire Reserve Card application states the following:
You’ll find similar language in plenty of other card applications.
The caveat to all of this is that while card issuers may take other income into account, it isn’t mandatory. A lot of applications ask for income generally — for example, the Alaska Airlines Visa Signature Card application just requests your “total income” with no further instructions. I think it’s fine to include your household income in cases like that, but I wouldn’t do it if the application specifically requests your “individual income” or something similar. If you’re unsure about whether including your household income is allowed, you can always call the card issuer for clarification.
For more on card applications and other credit questions, check out these posts:
If you have any other questions, please tweet me @thepointsguy, message me on Facebook or send me an email at info@thepointsguy.com.
Source: thepointsguy.com