topic Re: Including parents income on new credit application? in Credit Card Applications

Including parents income on new credit application?

Anonymous — Sat, 26 Oct 2019 04:59:46 GMT

A little info first; I'm 23 years old, working, living at home, and looking to apply for a credit card for the first time. I share a checking account with both of my parents. In fact, my paychecks direct deposit into their (our) account. My question is, when a credit application asks me for my total net income, am I allowed to include their income as well, considering I have full access to it? I've seen this question asked a few times before, and there never really seems to be a clear answer. I know that the 2009 CARD act changed the rules so that people 18-20 could not include parent income as their own, but then it gets unclear about people 21 and up. It makes it clear that people 21 and up would be able to list the income of spouses with joint accounts as their own, but what about parental income if I'm living at home and have a joint account with them? Would I be allowed to just list total household income? Listing total household income would greatly improve my chances of approval, considering my credit scores are not awesome (TU 620), and my personal income is not huge, but I obviously don't want to get accused of credit card fraud or something.

Anyone know the answer?

Thanks for the help!!!

Re: Including parents income on new credit application?

Anonymous — Sat, 26 Oct 2019 05:09:07 GMT

No....l strongly advise against this....for SO many reasons. I'm a bit jet lagged, so I'm not going to list them out.
We have plenty of low income earners on this site who built their credit accurately stating their income. You will be fine....just do it the right way.

Re: Including parents income on new credit application?

mikesonthemend — Sat, 26 Oct 2019 05:18:58 GMT

Technically you may. I wouldn't.

Re: Including parents income on new credit application?

Anonymous — Sat, 26 Oct 2019 07:48:07 GMT

The answer is that you cannot. The household income exception is intended for spouses, domestic partners, etc. who do not work outside of the home... not for adult children. You are clearly aware what the laws says.

Re: Including parents income on new credit application?

GApeachy — Sat, 26 Oct 2019 10:12:47 GMT

@Anonymous

Yep, agree with above.

There have been a few threads on 4506-T. Read up on those as well. (one in particular is a fella, around your age, maybe a little younger)

Like already mentioned above, start off on the right foot with the right income, Yours, and over time it will grow and you will not have to worry about a thing. Glad you asked, it's always best....."when in doubt; don't".

Re: Including parents income on new credit application?

Anonymous — Sat, 26 Oct 2019 14:24:24 GMT

As far as I understand you must have direct access to that money not a veberal agreement. Unless you have like joint accounts you can't include it.

Also avoid CreditOne for a first credit card.

Re: Including parents income on new credit application?

CreditInspired — Sat, 26 Oct 2019 14:45:23 GMT

@Anonymous wrote:
A little info first; I'm 23 years old, working, living at home, and looking to apply for a credit card for the first time. I share a checking account with both of my parents. In fact, my paychecks direct deposit into their (our) account. My question is, when a credit application asks me for my total net income, am I allowed to include their income as well, considering I have full access to it? I've seen this question asked a few times before, and there never really seems to be a clear answer. I know that the 2009 CARD act changed the rules so that people 18-20 could not include parent income as their own, but then it gets unclear about people 21 and up. It makes it clear that people 21 and up would be able to list the income of spouses with joint accounts as their own, but what about parental income if I'm living at home and have a joint account with them? Would I be allowed to just list total household income? Listing total household income would greatly improve my chances of approval, considering my credit scores are not awesome (TU 620), and my personal income is not huge, but I obviously don't want to get accused of credit card fraud or something.
Anyone know the answer?
Thanks for the help!!!

Hi and welcome to myFICO

I wouldnt, even though you have a joint checking account. I would like to know though why you dont have your own checking account so that your direct deposit can go into a non-joint account.

Also, a question you can ask yourself. Would your parents go bonkers if they found out you included their incomes on a CC application? I know I would!

Re: Including parents income on new credit application?

GApeachy — Sat, 26 Oct 2019 15:09:02 GMT

@CreditInspired wrote:
Would your parents go bonkers if they found out you included their incomes on a CC application? I know I would!

I just read an article....i know, i know "google" but this article said you'd have to have your parents co-sign on the credit card app.

I'll put the link: (hope that's okay)

https://www.creditcardinsider.com/blog/annual-income-for-credit-card-applications-everything-you-need-to-know/

Re: Including parents income on new credit application?

Anonymous — Sat, 26 Oct 2019 15:23:09 GMT

As others have said, I wouldn’t. Good luck when you app though, and welcome to the forums

Re: Including parents income on new credit application?

CreditCuriosity — Sat, 26 Oct 2019 15:35:09 GMT

Concur with above do it the right way as your parent certainly i doubt would pay your CC bills from their income if you ran them up. Use your income and build your profile and your career and in time you can put higher income as yours increases

Re: Including parents income on new credit application?

Aim_High — Sun, 27 Oct 2019 02:49:29 GMT

Welcome to My Fico Forums, @Anonymous

Absolutely agree with the above advice -- use only your own income.

Moreover, I agree with @CreditInspired

At age 23, you need to be developing your own financial profile and becoming financially independent from your parents.

@CreditInspired wrote: "I would like to know though why you dont have your own checking account so that your direct deposit can go into a non-joint account."

Re: Including parents income on new credit application?

Meanmchine — Sun, 27 Oct 2019 03:19:10 GMT

Much easier for your parents to add you as an AU on one or two of their accounts. Then apply for credit using your true income

Re: Including parents income on new credit application?

OmarGB9 — Sun, 27 Oct 2019 06:17:11 GMT

Yea OP I'm gonna have to go with the majority here. Don't poke the bear. If you happen to apply and get approved for a card and they ask for proof of income (4506-T), well, you'll be out of luck and they'd most likely close your account. Just do things the right way.

Re: Including parents income on new credit application?

cr101 — Sun, 27 Oct 2019 16:32:01 GMT

It was spelled out differently on 2 diff apps that I did. 1 said that you could include the income of someone who normally contributes to your expenses. For that 1, I would assume that you could include ALL of their income. Another app said that you can include the portion that they contribute to your expenses. So, if they pay a $50 bill for you, you could include that, but not their whole salary. It's best to ask that CC company of the policy. That way, they can't accuse you of fraud and hopefully won't close your account.

This is on Citi's site: "If you are 21 or older you may include income from others that you can reasonably access to pay your bills." Again, just ask the specific CC company. Most of the time, you'll see something near the income field that defines what you can include in income.

Re: Including parents income on new credit application?

CreditCuriosity — Sun, 27 Oct 2019 17:05:01 GMT

@cr101 wrote:
It was spelled out differently on 2 diff apps that I did. 1 said that you could include the income of someone who normally contributes to your expenses. For that 1, I would assume that you could include ALL of their income. Another app said that you can include the portion that they contribute to your expenses. So, if they pay a $50 bill for you, you could include that, but not their whole salary. It's best to ask that CC company of the policy. That way, they can't accuse you of fraud and hopefully won't close your account.

This is on Citi's site: "If you are 21 or older you may include income from others that you can reasonably access to pay your bills." Again, just ask the specific CC company. Most of the time, you'll see something near the income field that defines what you can include in income.

Ask yourself this question question this though(hypothetical obviously). If you wracked up say 15k in CC bills would your parents reasonably pay off said debt(highly doubtful). I don't see why people feel like they need to inflate their income as income plays a small role in whether someone is extended credit it is their profile that determines this unless they are going for a signature or infinite card...

Re: Including parents income on new credit application?

cr101 — Sun, 27 Oct 2019 17:28:20 GMT

@CreditCuriosity wrote:
@cr101 wrote:
It was spelled out differently on 2 diff apps that I did. 1 said that you could include the income of someone who normally contributes to your expenses. For that 1, I would assume that you could include ALL of their income. Another app said that you can include the portion that they contribute to your expenses. So, if they pay a $50 bill for you, you could include that, but not their whole salary. It's best to ask that CC company of the policy. That way, they can't accuse you of fraud and hopefully won't close your account.

This is on Citi's site: "If you are 21 or older you may include income from others that you can reasonably access to pay your bills." Again, just ask the specific CC company. Most of the time, you'll see something near the income field that defines what you can include in income.
Ask yourself this question question this though(hypothetical obviously). If you wracked up say 15k in CC bills would your parents reasonably pay off said debt(highly doubtful). I don't see why people feel like they need to inflate their income as income plays a small role in whether someone is extended credit it is their profile that determines this unless they are going for a signature or infinite card...

It's not uncommon for parents or other people to pay others' bills. That's probably why so many CC companies allow this. My post was just an answer to OP's question; I wasn't taking any side. The CC company just wants to know how much income he has access to cover his expenses. Throwing out random numbers here. Let's say that you make 20k a year and have expenses of 30k, but your parents or significant other regulary gives you 20k a year (again, not uncommon), why shouldn't you be able to include that in your income to show that even though YOU only make 20k, you have other means of income to cover your expenses?

Re: Including parents income on new credit application?

Aim_High — Sun, 27 Oct 2019 18:26:59 GMT

@cr101 wrote:
@CreditCuriosity wrote:
@cr101 wrote:
It was spelled out differently on 2 diff apps that I did. 1 said that you could include the income of someone who normally contributes to your expenses. For that 1, I would assume that you could include ALL of their income. Another app said that you can include the portion that they contribute to your expenses. ... It's best to ask that CC company of the policy. That way, they can't accuse you of fraud and hopefully won't close your account.
If you wracked up say 15k in CC bills would your parents reasonably pay off said debt(highly doubtful). I don't see why people feel like they need to inflate their income as income plays a small role in whether someone is extended credit it is their profile that determines this unless they are going for a signature or infinite card...
It's not uncommon for parents or other people to pay others' bills. That's probably why so many CC companies allow this. ... The CC company just wants to know how much income he has access to cover his expenses ... why shouldn't you be able to include that in your income to show that even though YOU only make 20k, you have other means of income to cover your expenses?

While some lenders may allow the practice, it certainly touches on a tricky and gray area that will depend on the bank. If you were to consider including other incomes, it would need to be specifically discussed and disclosed up-front. As was mentioned earlier in the thread, the lender may choose to have the other party be a co-signer on the credit extended or to sign documents indicating they are aware the applicant is taking out credit and using the other person's assets/income as a basis for extension of credit. There might be assumptions made by the applicant that "Oh, they won't mind" when actually they *DO* mind! To answer your question about why you shouldn't be able to include that in "your income", the answer is that EARNED income may be treated differently in terms of risk assessment. A family member may be choosing to give you $500 a week to help out, but they can suddenly change their mind. Earned income or steady income from other sources such as a trust fund or a disability payment is much more reliable. What if that family member loses their job? Will they be able to continue paying? The odds of two people keeping a job (you and your parent) is less than the odds of one person (you) keeping a job. It adds additional risk for the lender that they may choose to take into account. The safest recommendation is to base credit applications on earned income or assets of the applicants and/or coapplicants only. Otherwise, as a minimum, you need to ask the lender.

Re: Including parents income on new credit application?

Jnbmom — Sun, 27 Oct 2019 18:32:06 GMT

Bottom line use your own income not your parents. You can try to twist it all you want, but it’s not a wise move.

My children ever try to use our income , well mamma bear won’t be happy 😡

Re: Including parents income on new credit application?

cr101 — Sun, 27 Oct 2019 18:43:55 GMT

@Aim_High wrote:

There might be assumptions made by the applicant that "Oh, they won't mind" when actually they *DO* mind! To answer your question about why you shouldn't be able to include that in "your income", the answer is that EARNED income may be treated differently in terms of risk assessment.

We might be talking about different things. Maybe I missed something, but I believe that he's just entering his and his parents' income in a little field. He's not entering his parents' names on the app and obligating them to do anything. I've only seen one app (WF) that asks if the income wasn't strictly pay (investments, interest, etc). I suspect that if I had checked the box to indicate that my income included other things, they would have wanted some type of verification---which is why I just didn't include it LOL. As far as including others' income being risky, that's on the CC companies that allow it. *shrugs*...just thought about bank bailouts, so it's probably NOT just a CC company/bank issue after all. LOL

OP, whatever you do, just don't get in over your head with your new credit. Someone mentioned a first-time card for you. I suggest Capital One. It's secured, but doesn't show as secured on your report. You'll get an auto CLI after 5 months and it really helps your score. Discover's also good, too. They show as secured, though. Not sure if it matters. Best of luck!

Re: Including parents income on new credit application?

zerofire — Sun, 27 Oct 2019 19:11:08 GMT

First I must say that you really should get your own account. You are already old enough and are making your own funds to do so. I am sure that your parents are fine people but finances are one of those things that should be kept separate unless all parties are unified in some way other than the account.

The income field is usually defined by the bank and not by you. Some banks are stricter on what can be added in than others. Some banks will only accept your income, others go by household, others still allow anyone that helps you out. Since you did not list the bank of choice we cannot tell you exactly what the bank wants. Regardless I recommend for best results to only use your own income. This might cause a conservative result but will at least give you a stable offer. Your parents cannot bail you out forever.