OK to artificially inflate your income to help approval chances?

[longhorn11]

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@UpNComing wrote:

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@webhopper wrote:
For different types of credit, the applications ask for different things. For a mortgage or an auto, it's different than a cc. I have two mortgages, one is for a rental duplex, the other is for my home. I list the gross rental income where it says "other income"

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I was applying for a cc online.

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BofA asks for both indiviudal and household on a CC app or CLI request.  They say it is to determine the best credit line for the card.

[Anonymous]

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@JasonBourneOfCredit wrote:
Thanks. I live with my girlfriend. Would I add her income to mine or household income?

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Like others said, HHI is almost never used. Even if she was your wife, unless you live in Wisconsin (I think - it was one of those states I've never been to ), you couldn't claim her income.

Which makes perfect sense. Assume you live with her and both of you make, say, $35k a year .If you could both claim each other's income in applications, they'd be extending each one of credit based on $70k ability to pay - in other words, $140k ability to pay between the two of you. But in reality, you only have half that. It gets even more skewed when you have more than two people, such as college kids living at home claiming their parents income as household income. At that point it would in no way be reflecting your real ability to pay debt back - which is the whole reason they ask for your income, so they can judge how much you can reasonably afford.

[crunching_numbers]

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@Anonymous wrote:

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@JasonBourneOfCredit wrote:
Thanks. I live with my girlfriend. Would I add her income to mine or household income?

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Like others said, HHI is almost never used. Even if she was your wife, unless you live in Wisconsin (I think - it was one of those states I've never been to ), you couldn't claim her income.

Which makes perfect sense. Assume you live with her and both of you make, say, $35k a year .If you could both claim each other's income in applications, they'd be extending each one of credit based on $70k ability to pay - in other words, $140k ability to pay between the two of you. But in reality, you only have half that. It gets even more skewed when you have more than two people, such as college kids living at home claiming their parents income as household income. At that point it would in no way be reflecting your real ability to pay debt back - which is the whole reason they ask for your income, so they can judge how much you can reasonably afford.

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I completely disagree. Uncle Sam sees a married couple as a "financial unit" and taxes us accordingly.  The mortgage and household expenses are usually combined for married people.  Items purchased on credit are often for the benefit of both parties, and many of us are AU's on the accounts in question.  Some marriages have a disparity in income where one spouse earns considerably more than the other, but their bills are paid from the joint income.  Most CC's don't offer the ability to open joint accounts anymore.

[crunching_numbers]

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@pizzadude wrote:

Someone recently posted a list of all the different FICO scoring models that creditors can purchase.  And guess what, there is a FICO model that creditors can use to guesstimate what you really make.    Dunno who uses it and who doesn't but just keep in mind that creditors usually have ways of finding these things out if they want to.....

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Hey Pizzadude, can you link to the list or is it pasted somewhere? I would Love to see it!

[Anonymous]

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@crunching_numbers wrote:

I completely disagree. Uncle Sam sees a married couple as a "financial unit" and taxes us accordingly.  The mortgage and household expenses are usually combined for married people.  Items purchased on credit are often for the benefit of both parties, and many of us are AU's on the accounts in question.  Some marriages have a disparity in income where one spouse earns considerably more than the other, but their bills are paid from the joint income.  Most CC's don't offer the ability to open joint accounts anymore.

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You can be married and file taxes separately if you choose to, so it's not like you HAVE TO be a financial unit for taxpaying purposes. Of course, you probably save by filing jointly - I know it definitely lowers my taxes since my income is higher than my wife's.

But that's not exactly what I'm talking about.

Lets make some completely arbitary assumptions (that have nothing to do with reality).

You make $50k a year.
Your S.O. makes $50k a year.
Creditors extend you 10% of your income (and base your credit line on absolutely nothing else)


So if you applied for credit, with $50k income you'd get a $5k credit line. Your S.O. applies for credit and they also get $5k. Between the two of you, you get $10k worth of credit for having a combined income of $100k.

But if you were using HHI, both of you would be issued a $10k credit line, so you'd end up with $20k worth of credit while still only having the same $100k combined income.

Of course, the chance of both people experiencing financial troubles and defaulting on their loans at the same time is lower than just one person defaulting. But in essence, the bank is doubling their risk by allowing HHI to be used, since they're extending twice the amount of credit towards household income as they would be towards individual income.

And the situation is obviously even more skewed if you have kids who'd be applying towards credit using your claimed HHI. The bank would have to track who all claim the HHI, which is obviously not feasible.  But if they just allow HHI , the bank has no way of knowing if they're lending once against that claimed income, or twice (once for each spouse) or more (if there were more 18+ year old dependants). Not to mention that just because you claim your spouse's income as HHI doesn't mean they're actually liable to pay the debt back.

I mean I agree that it has issues - a stay-at-home mom with $0 income technically can't get any credit since "they" don't have any income even if their husband brings in a huge paycheck which they use for all their expenses. And it causes issues when one spouse makes considerably more than the other. But it helps prevent banks from over-extending credit.

[LS2982]

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@JasonBourneOfCredit wrote:

I know, this is an ethically gray area, but who has slightly bumped your income number on an app to help your chances?

Does it help your chances? Do they really know?

I make about 35k but if I put 45k would it really make a difference?

Just thought I'd ask!!

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Not OK at all. Your actually putting putting yourself in a bad situation if the creditor is AMEX because the ywill F/R (Financial Review) you and ask for your tax returns as proof of income.

IMO, if you don't make that much, don't put it down.

[LS2982]

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@afbar1114 wrote:

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@JasonBourneOfCredit wrote:
Thanks. I live with my girlfriend. Would I add her income to mine or household income?

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just your income you are no longer allowed to add household income as of nov 2011

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Except if you live in Wisconcin. You can use Household income there I believe.

[LS2982]

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@Chris123nTx wrote:
Kinda like liar loans. Those worked well for millions of people to get into their dream home.

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They all should be procecuted to the fullest for it too!

[crunching_numbers]

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@Anonymous wrote:

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@crunching_numbers wrote:

I completely disagree. Uncle Sam sees a married couple as a "financial unit" and taxes us accordingly.  The mortgage and household expenses are usually combined for married people.  Items purchased on credit are often for the benefit of both parties, and many of us are AU's on the accounts in question.  Some marriages have a disparity in income where one spouse earns considerably more than the other, but their bills are paid from the joint income.  Most CC's don't offer the ability to open joint accounts anymore.

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You can be married and file taxes separately if you choose to, so it's not like you HAVE TO be a financial unit for taxpaying purposes. Of course, you probably save by filing jointly - I know it definitely lowers my taxes since my income is higher than my wife's.

But that's not exactly what I'm talking about.

Lets make some completely arbitary assumptions (that have nothing to do with reality).

You make $50k a year.
Your S.O. makes $50k a year.
Creditors extend you 10% of your income (and base your credit line on absolutely nothing else)


So if you applied for credit, with $50k income you'd get a $5k credit line. Your S.O. applies for credit and they also get $5k. Between the two of you, you get $10k worth of credit for having a combined income of $100k.

But if you were using HHI, both of you would be issued a $10k credit line, so you'd end up with $20k worth of credit while still only having the same $100k combined income.

Of course, the chance of both people experiencing financial troubles and defaulting on their loans at the same time is lower than just one person defaulting. But in essence, the bank is doubling their risk by allowing HHI to be used, since they're extending twice the amount of credit towards household income as they would be towards individual income.

And the situation is obviously even more skewed if you have kids who'd be applying towards credit using your claimed HHI. The bank would have to track who all claim the HHI, which is obviously not feasible.  But if they just allow HHI , the bank has no way of knowing if they're lending once against that claimed income, or twice (once for each spouse) or more (if there were more 18+ year old dependants). Not to mention that just because you claim your spouse's income as HHI doesn't mean they're actually liable to pay the debt back.

I mean I agree that it has issues - a stay-at-home mom with $0 income technically can't get any credit since "they" don't have any income even if their husband brings in a huge paycheck which they use for all their expenses. And it causes issues when one spouse makes considerably more than the other. But it helps prevent banks from over-extending credit.

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So who does the investment income or rental property income in both of their names get creditied to? And talk about giving one partner total finanacial control over the other! I understand that this puts a different spin on risk calculations for the banks, but this just does not seem fair.  So should the stay at home dad get a childcare "income allowance" so that he is not under the financial "control" of his doctor wife?  This structure is unfair to single income and unbalanced income households.  Many women, even today, stay at home and care for the kids because they would end up paying out the whole check for childcare anyway.  Some reenter the workforce after managing 20 years of the household finances and will have thin files for their years of financial responsibility.

 As far as taxes, this is the very reason they make us pay a marriage penalty! Because of income disparity.

[Anonymous]

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@JasonBourneOfCredit wrote:

I know, this is an ethically gray area, but who has slightly bumped your income number on an app to help your chances?

Does it help your chances? Do they really know?

I make about 35k but if I put 45k would it really make a difference?

Just thought I'd ask!!

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Let me reword that original question for you:

"I know this is a legally clearly defined area, but who has committed fraud on an app to help your chances."

http://www.creditcards.com/credit-card-news/legal-consequences-of-lying-on-credit-card-application-f...