Will I qualify for Chase Sapphire Preferred?

[Lin55]

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@espnjunkie wrote:

It's always dicey considering a loan to be income. On a balance sheet a loan is a liability, not an asset. While a 30,000.00 loan does give you that 30,000.00, it really is -30,000.00 to you overall. 

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Although it is -$30K, it is currently $30K in your pocket, and the bank knows you can pay it back (since it is literally liquid in your pocket). Now, can that student pay off that 30K student loan later? That is not the credit card company's problem! See where i'm comin' from?

[revvystoke]

Why apply for the sapphire preferred? Is it because of the initial signup bonus? I can see applying for it then downgrading before AF. For me, it didn't make sense to apply until I knew I had $10k plus that I could spend yearly on that card on travel before I wanted to apply for it, otherwise the AF killed any chance I had coming out ahead. 

It's not ethical to consider loans as income, the income is canceled out by the liability of the loan. I am a part-time student as well, 10 credits lined up this semester. I treat cc's as debit cards, I do however treat scholarships as income.

I wouldn't consider applying unless you travel alot for work, which is why I wanted it.

[espnjunkie]

I agree. Unless you are spending over $10,000.00 per year on the card it's not necessarily worth it to sign up (outside of a signup bonus). While that 30,000 is in your pocket, it still isn't technically "your" money, it's the banks money until you pay it back. Also that isn't yearly income since that is a one time loan, rather than 30,000 that you make each year. 

While you may be able to use that as income for application purposes, I'd be careful about how you treat that money because that isn't the best financial approach to have. 

[enharu]

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@Lin55 wrote:

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@espnjunkie wrote:

It's always dicey considering a loan to be income. On a balance sheet a loan is a liability, not an asset. While a 30,000.00 loan does give you that 30,000.00, it really is -30,000.00 to you overall. 

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Although it is -$30K, it is currently $30K in your pocket, and the bank knows you can pay it back (since it is literally liquid in your pocket). Now, can that student pay off that 30K student loan later? That is not the credit card company's problem! See where i'm comin' from?

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Nope. Doesn't work that way. Not even remotely close.

A loan is a liability, not an asset, just like espnjunkie said. 

What you are referring to is cash flow, but just because you have positive (temporary) cash flow doesn't change the fact that a loan is regarded as a liability. 

The bank doesn't know you can pay it back. No one knows. For all they know, you could have taken the 30k to a casino and lost all of it in just 1 night. Just because it's liquid doesn't mean it's going to stay in your bank account, and that you will have the ability to repay it back tomorrow / in a few days / next week / next month / etc.

And as for the future? About 40% of college grads are unemployed. There are lots of people whom eventually defaulted on their student loans. Just take a quick glance at rebuilding section and you see a lot of examples. If you can't even afford to pay your student loans debt, what are the chances of you actually paying your credit card debt?

Lets assume that loans are considered as income for this example.

1. I borrow 50k in student loans and have no job, and therefore no real income. But for the sake of this argument, my income is now 50k. 

2. So, without any real source of income other the student loan, which I now fraudulently misrepresentated it as my income, I walk into a Mercedes dealership. I decided to lease a SLK and write down 50k as my income. Let's assume they did not bother verifying my income, and I drive out of the dealership with the car. 

3. Next, I walk into a Wells Fargo branch for a personal loan of 15k, and wrote down 50k as my income again. Assuming they didn't verify my income as well, I now have 65k in loans, but at the same time also 65k income and cash! There's 65k in my pocket. The banks know I can pay it back!

4. With a 65k income, I decided to apply for a mortgage, and wrote down 65k as my income. Assuming they didn't verify my income, I now have a mortgage payment to make too.

5. I applied for 3-4 credit cards and wrote 65k as my income as well. Went to the club with some friends, had some crazy parties, and put a 20k charge on the cards.

6. I then realize I can no longer sustain my loan payments as my cash flow is dwindling down. 

7. I file BK and default. 

If you honestly still think loans are considered as income, try applying for a loan which requires a manual review and income verification. 

[espnjunkie]

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@enharu wrote:

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@Lin55 wrote:

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@espnjunkie wrote:

It's always dicey considering a loan to be income. On a balance sheet a loan is a liability, not an asset. While a 30,000.00 loan does give you that 30,000.00, it really is -30,000.00 to you overall. 

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Although it is -$30K, it is currently $30K in your pocket, and the bank knows you can pay it back (since it is literally liquid in your pocket). Now, can that student pay off that 30K student loan later? That is not the credit card company's problem! See where i'm comin' from?

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Nope. Doesn't work that way. Not even remotely close.

A loan is a liability, not an asset, just like espnjunkie said. 

What you are referring to is cash flow, but just because you have positive (temporary) cash flow doesn't change the fact that a loan is regarded as a liability. 

The bank doesn't know you can pay it back. No one knows. For all they know, you could have taken the 30k to a casino and lost all of it in just 1 night. Just because it's liquid doesn't mean it's going to stay in your bank account, and that you will have the ability to repay it back tomorrow / in a few days / next week / next month / etc.

And as for the future? About 40% of college grads are unemployed. There are lots of people whom eventually defaulted on their student loans. Just take a quick glance at rebuilding section and you see a lot of examples. If you can't even afford to pay your student loans debt, what are the chances of you actually paying your credit card debt?

Lets assume that loans are considered as income for this example.

1. I borrow 50k in student loans and have no job, and therefore no real income. But for the sake of this argument, my income is now 50k. 

2. So, without any real source of income other the student loan, which I now fraudulently misrepresentated it as my income, I walk into a Mercedes dealership. I decided to lease a SLK and write down 50k as my income. Let's assume they did not bother verifying my income, and I drive out of the dealership with the car. 

3. Next, I walk into a Wells Fargo branch for a personal loan of 15k, and wrote down 50k as my income again. Assuming they didn't verify my income as well, I now have 65k in loans, but at the same time also 65k income and cash! There's 65k in my pocket. The banks know I can pay it back!

4. With a 65k income, I decided to apply for a mortgage, and wrote down 65k as my income. Assuming they didn't verify my income, I now have a mortgage payment to make too.

5. I applied for 3-4 credit cards and wrote 65k as my income as well. Went to the club with some friends, had some crazy parties, and put a 20k charge on the cards.

6. I then realize I can no longer sustain my loan payments as my cash flow is dwindling down. 

7. I file BK and default. 

If you honestly still think loans are considered as income, try applying for a loan which requires a manual review and income verification. 

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Very excellent point here. Your example clearly shows what is wrong with considering a loan income. 

[Lin55]

Well whatever we all feel, all I can say is I told Amex the 100% truth (which to me is all that matters), and they appoved me, and so happy I will stay

[enharu]

Well, a big part of the reason is because it's an automated approval. The computer most likely regarded "student loans" as your employer name. Not saying you should, but even if you wrote "drug dealer" on the app, you probably will end up with the same result.

That being said, when anyone asks you for your income, it's pretty self explanatory to not include loans, debt or any other irrelevant information, since it's your income that they are asking for after all.

[Lin55]

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@enharu wrote:
Well, a big part of the reason is because it's an automated approval. The computer most likely regarded "student loans" as your employer name. Not saying you should, but even if you wrote "drug dealer" on the app, you probably will end up with the same result.

That being said, when anyone asks you for your income, it's pretty self explanatory to not include loans, debt or any other irrelevant information, since it's your income that they are asking for after all.

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True, but I've had the card for 2 years, and if they FR me now then I have a job with regular income. So all is good. My points to the OP is just put the truth, if they deny, they deny. If they approve they approve. Right?

OP, just call the credit app and apply by phone if you're concerned, just tell them its student loans. If they approve they will just give u a small CL. That's what I did.

That's what I did all throughout college and had 9 credit cards. I even called them and told me it was fine.  All they do is give you a low CL. Edit* and if it's true the starting CL for the CSP is $5,000 then theres a small chance you will get this card.

[Lin55]

@enharu, Jeez! You have over $70K from Chase! I guess there is no true internal limit they hand out, huh!?

[espnjunkie]

If you have the assets, then there really is not limit for banks really. They just have to know you can back it up. 

Rule of thumb though is that if you wouldn't list certain income if you were applying for a mortgage, don't list that as income for a credit card app