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wealthcreator
Posts: 211
Registered: ‎07-02-2012
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Which Income to fill while applying CC

Hi,

 

I have read household income should be filled up in cc application form. So does this mean that combined income of husband+wife should be filled up ??

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Razeus
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Registered: ‎04-02-2012
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Re: Which Income to fill while applying CC

I just put mine and then my wife as secondary/additional.
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jd5189
Posts: 470
Registered: ‎08-14-2012
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Re: Which Income to fill while applying CC

If it says household income or just income, I put both of our incomes combined. I've only ever been asked for combined, but when my wife applied for her Wells Fargo card they asked for just her income not including spousal. Then, I put my income as additional. Also, I put exactly what we filed our taxes for the past year not "projected" even if I know I will be bringing in more than that the upcoming year. 

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Disclaimer: I am by no means a financial advisor. My posts are based on opinion, experience, and/or knowledge.
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cashnocredit
Posts: 1,028
Registered: ‎07-18-2009
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Re: Which Income to fill while applying CC

Every time I app for credit I wonder about this.

 

I'm retired. My SS income is 20k.  However, I have some interest income and a large amount of unrealized cap gains in investments. I cash enough out each year to push my income into 6 digits. I basically use a running 3 year minimum based on IRS reported AGI.  This works as long as I don't have a bad year on my investments but what if I lose money next year? Also, income in the IRS sense doesn't correlate with changes in net worth. That can and has easily fluctuated a lot up and down. Seems to me the entire credit industry is oriented towards wage income and that really doesn't work for retired peeps. Since us boomers are gonna grow a lot, it seems to me their needs to be some sort of change.

 

This sort of question is pretty complex for retired people that live off their nest egg.

 

I have reestablished credit over the last couple years
so my moniker is, well, rather out of date.

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DaveSignal
Posts: 2,111
Registered: ‎07-29-2011
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Re: Which Income to fill while applying CC

[ Edited ]

I always put my own income.  But the lenders probably are not going to verify your income. . . although I did have to send in pay statements for one of my cards and I have heard of posters here who have had to send in tax statements.

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jd5189
Posts: 470
Registered: ‎08-14-2012
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Re: Which Income to fill while applying CC


cashnocredit wrote:

Every time I app for credit I wonder about this.

 

I'm retired. My SS income is 20k.  However, I have some interest income and a large amount of unrealized cap gains in investments. I cash enough out each year to push my income into 6 digits. I basically use a running 3 year minimum based on IRS reported AGI.  This works as long as I don't have a bad year on my investments but what if I lose money next year? Also, income in the IRS sense doesn't correlate with changes in net worth. That can and has easily fluctuated a lot up and down. Seems to me the entire credit industry is oriented towards wage income and that really doesn't work for retired peeps. Since us boomers are gonna grow a lot, it seems to me their needs to be some sort of change.

 

This sort of question is pretty complex for retired people that live off their nest egg.

 


Income = Income... if its cash flow coming to you, it is income. I think a lot of incomes fluctuate year to year, but that is why I always put down my most recent IRS income I filed with when asked for income on CC applications. That way, it is concrete because that is what I filed with. Income can even be an allowance a parent gives a student for college. 

I think the reason CC companies seem to be geared towards wage income is because a majority of the people that app for credit cards are going to be people who are currently employed so they are most interested in during applications. But, all investment income is income. So your income would be your SS + interest + capital gains (or losses), but you would have to sell those shares in order for the your capital gains to be income otherwise it is just still an investment. Some CC's ask about investments, but never had I needed to declare what investments we actually have.

Here is an example for me that some people do not realize is income. Currently, I am working on a degree that my company is paying for. All of the reimbursements I recieve from my company for my degree is income. Idealy, this will boost my income by close to $25,000 this year. 

In my wallet: Amex PRG & Zync, Amex BCE (19.2k), Chase Freedom (5k), PSECU Visa/PSL (20k)
Current Scores: Equifax: 738 (Fako) TransUnion: 721 (Fico) Experian: 717 (Fico)
Disclaimer: I am by no means a financial advisor. My posts are based on opinion, experience, and/or knowledge.
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mmmmmm
Posts: 156
Registered: ‎06-01-2012
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Re: Which Income to fill while applying CC


jd5189 wrote:

cashnocredit wrote:

Every time I app for credit I wonder about this.

 

I'm retired. My SS income is 20k.  However, I have some interest income and a large amount of unrealized cap gains in investments. I cash enough out each year to push my income into 6 digits. I basically use a running 3 year minimum based on IRS reported AGI.  This works as long as I don't have a bad year on my investments but what if I lose money next year? Also, income in the IRS sense doesn't correlate with changes in net worth. That can and has easily fluctuated a lot up and down. Seems to me the entire credit industry is oriented towards wage income and that really doesn't work for retired peeps. Since us boomers are gonna grow a lot, it seems to me their needs to be some sort of change.

 

This sort of question is pretty complex for retired people that live off their nest egg.

 


Income = Income... if its cash flow coming to you, it is income. I think a lot of incomes fluctuate year to year, but that is why I always put down my most recent IRS income I filed with when asked for income on CC applications. That way, it is concrete because that is what I filed with. Income can even be an allowance a parent gives a student for college. 

I think the reason CC companies seem to be geared towards wage income is because a majority of the people that app for credit cards are going to be people who are currently employed so they are most interested in during applications. But, all investment income is income. So your income would be your SS + interest + capital gains (or losses), but you would have to sell those shares in order for the your capital gains to be income otherwise it is just still an investment. Some CC's ask about investments, but never had I needed to declare what investments we actually have.

Here is an example for me that some people do not realize is income. Currently, I am working on a degree that my company is paying for. All of the reimbursements I recieve from my company for my degree is income. Idealy, this will boost my income by close to $25,000 this year. 


That's a slippery slope, one which I wouldn't want to be caught on.  You're essentially double counting part of your income, which isn't what they necessarily want.

 

For example, let's say you have an annual income of $150k.  You then spend $25k on college, for which you're reimbursed.  You're reporting your total income as $175k, but in reality, it's only $150k.  The income credit card companies want is whatever you want considered as a basis for paying back the loan or balance.  You can't apply $175k to your balance, because you only have $150k.  The $25k you're getting reimbursed is strictly for the degree you're working on.

 

While many credit card companies don't explicitly forbid an applicant from including things like scholarships or grants, etc., if you can't apply that money to pay back the loan, I wouldn't count it.

 

I currently receive a $4k scholarship per year, but I don't count that as part of my income, because I can't apply it to anything other than my education.  It's the same as you getting reimbursed.  You make $150k, you spend $25k bringing you to $125k, and you're reimbursed $25k, bringing you back to $150k.  If you don't pursue your degree, you make $150k, don't spending anything, and are still at $150k.  Income is not what your total aggregate spending is, it's what you can apply to the loan itself.

 

While I know several credit card companies allow you to do exactly what you say and it isn't illegal, I still don't think it's putting yourself in the best position. I know many would argue this saying they'll take whatever they can get, but in the end, you can't count that additional $25k, just like I can't count my $4k for paying back the loan, which is what your income should be.  It's over inflating your income.

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jd5189
Posts: 470
Registered: ‎08-14-2012
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Re: Which Income to fill while applying CC

[ Edited ]

My reimbursement is considered compensation from my employer per Uncle Sam. I pay income taxes on it (beyond my salary). Therefore, it is income. 

If AMEX or any other CC company were to FR me ever, my income on my tax forms would read exactly the income I applied for the card with. That is why I ALWAYS use my before tax income I most recently filed for when filling out CC apps.

Yes, I understand your reasoning, but in the end it IS considered additional income on top of base salary or I would not be getting taxed on it. If I did not have to claim my reimbursement as additional income, I would not consider it additional income. 

If you personally do not consider it income, then what do you consider it? Calling it even? Just because it puts me back at my base salary do I not consider it income on my taxes? That is more of a liability and a situation that I would not want to get myself into is trying to reason with the IRS that I should not be taxed on my reimbursement because it is not really considered additional income because I spent 25k on school that year. In the end, the government considers my income: $150k+$20k (the first 5k is tax free). They do not care if I actually went to school with it or even if it is reimbursed, they simply care that you took additional money in.

How do you not consider your scholarship as income just because it gets spent on education when you do have to claim them on your tax form as income. The 25k (or 9k in your case), in a sense, is applicable to any sort of debt or loan because it is 25k (or 9k) more than I would have had if I had not been reimbursed which means I have more to apply to debt than I would have without the reimbursement.

Therefore, that is why I always use and recommend using the income claimed on taxes as the income that should be input on CC app’s. It’s there in black and white. Just as if any CC asked for my paystub (at the end of the year) it would show year to date a salary of 150k + bonus + additional income of 25k for reimbursement equaling a total of 175k+yearly bonus. In your case, your pay stub would not show your scholarship. However, your 1098 would as would your 1040 when filed. I am not inflating my income because it’s EXACTLY the amount of cash (minus Uncle Sam’s cut of course but with CC's you always input your income before taxes) that flowed into my bank account. 




In my wallet: Amex PRG & Zync, Amex BCE (19.2k), Chase Freedom (5k), PSECU Visa/PSL (20k)
Current Scores: Equifax: 738 (Fako) TransUnion: 721 (Fico) Experian: 717 (Fico)
Disclaimer: I am by no means a financial advisor. My posts are based on opinion, experience, and/or knowledge.
Established Contributor
cashnocredit
Posts: 1,028
Registered: ‎07-18-2009
0

Re: Which Income to fill while applying CC

[ Edited ]

jd5189 wrote:

cashnocredit wrote:

Every time I app for credit I wonder about this.

 

I'm retired. My SS income is 20k.  However, I have some interest income and a large amount of unrealized cap gains in investments. I cash enough out each year to push my income into 6 digits. I basically use a running 3 year minimum based on IRS reported AGI.  This works as long as I don't have a bad year on my investments but what if I lose money next year? Also, income in the IRS sense doesn't correlate with changes in net worth. That can and has easily fluctuated a lot up and down. Seems to me the entire credit industry is oriented towards wage income and that really doesn't work for retired peeps. Since us boomers are gonna grow a lot, it seems to me their needs to be some sort of change.

 

This sort of question is pretty complex for retired people that live off their nest egg.

 


Income = Income... if its cash flow coming to you, it is income. I think a lot of incomes fluctuate year to year, but that is why I always put down my most recent IRS income I filed with when asked for income on CC applications. That way, it is concrete because that is what I filed with. Income can even be an allowance a parent gives a student for college. 

I think the reason CC companies seem to be geared towards wage income is because a majority of the people that app for credit cards are going to be people who are currently employed so they are most interested in during applications. But, all investment income is income. So your income would be your SS + interest + capital gains (or losses), but you would have to sell those shares in order for the your capital gains to be income otherwise it is just still an investment. Some CC's ask about investments, but never had I needed to declare what investments we actually have.

Here is an example for me that some people do not realize is income. Currently, I am working on a degree that my company is paying for. All of the reimbursements I recieve from my company for my degree is income. Idealy, this will boost my income by close to $25,000 this year. 



There is a difference between income for IRS purposes and income for credit app purposes. One could have virtual income, such as a 1099-C. It may count for IRS purposes but I sure wouldn't include it in any normal sense as income. It damned sure isn't any form of cash flow. There are other examples of virtual income such as the alt min on exercised qualified stock options. And that's a real gem because it's considered income using one required tax calcuation and not income using the other.

 

And then there is the tax free municipals a friend has. Most of her income is from them. She won the lottery a couple decades ago so it's a lot of income. But it isn't taxed nor is it considered income by the IRS. Now that's real income. No tax, no SS withholding, justs straight, legal money. Should she include it when apping for credit? I sure think so.

 

I use AGI as reported to the IRS though I do find it weird I could still have a large income even if my net worth were to decline 50% in a year. But when your income depends on investments/net worth, as opposed to pension, SS, or trust funds, one can have one hell of a high "income" until there is no more left then it's "end of line."

 

While retired folks are currently a small fraction of CC customers it is growing. Fast. Banks will have to find to accommodate the complexity of the "income" question for us senior citizens. No doubt there will be increased verification of means to pay.

 

I have reestablished credit over the last couple years
so my moniker is, well, rather out of date.

WM Discover $1800, WF Plat 12k, Chase Freedom Siggy15k, Amex Plat (60k H/B), Citi AA EWMC 25k

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