Chase Reconsideration and Income Verification

[HappyGoLucky4U]

Hi, I recently applied for a chase card and was declined due to my debt-to-income ratio.  After researching the web, I read that I can include retirement fund distributions (does an early withdrawal counts as income with Chase?) with my annual gross income, my main job income. Early this year I had a (taxable) withdrawal and was deposited into my checking account.  After calling the reconsideration line, explaining that I wanted to include my retirement fund distributions (taxable withdrawals I made this year)...the rep started the reconsideration process and ended up asking me additional questions.  After several holds, the rep adivsed me that they would send a letter in the mail with instructions on verifying my gross income.  I wanted to see if anybody is familar with this process?  What exactly would I need to submit to verify my gross income so I can prepare the documents now.  Would I need to send my tax return and W2s?  And if I made those withdraws this year, how can I show proof of those additional income?  If I am proceeding to income verification stage and not a declined, does that mean I have a good chance to being approved for the chase card as long as they can verify my income?  Thank you in advance!

[RadioRob]

I assume if they ask for proof and it has not shown on your taxes yet, you could send them copies of the disburstment statement or your bank statements showing the deposits.  

[RootDet]

A couple of thoughts here:

1) They will want to see 2-year tax returns and.or paystubs as the likely candidate. maybe ever a 4506T to get it from IRS directly

2) If these are one-time distributions, expect chase to effectively disallow them for your income calculations. Because they need to evaluate your ability to repay the debt today and ongoing. So if they do not see proof that the level of distributions will continue, they will now consider at as ongoing income. 

[HappyGoLucky4U]

Thank you for your thoughts.  If Chase chooses to disallow them for the income calculations, will they just recalculate based on my tax return and use what they consider as income, approving a credit limit based on those numbers (if meeting the recalculated criteria/threshold)  or would they just declined since it doesn't match the gross income amount I submitted?

[RadioRob]

The question is what do they end up seeing.  If they use your taxes, it would not indicate if it was a one-time payment or a recurring payment.  They would just see what was reported for the tax year.  

If you go the statement route and they see one BIG number deposit, that screams one time payment.  In general, when looking at a statement, you would want to see bit less than 1/12th of the income you're claiming as your annual.  (It would be less because of taxes/401K would make the net smaller than the gross, and they understand people get bonuses, etc.) 

[HappyGoLucky4U]

That's a great point.  If they went with the 2019 tax return, how would they verify any expected income from this year?

[RadioRob]

They assume you're going to hold steady. It's not a proof of what you made this year. The idea is if you are claiming on your application to have 300K annual income, but your income last year was only 150K, that would not make sense. If you said 300 and they saw say 275, it would be reasonable income increase.

They don't need to know down to the penny what you made. The idea is are you significantly distorting income.

[core]

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@HappyGoLucky4U wrote:

That's a great point.  If they went with the 2019 tax return, how would they verify any expected income from this year?

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I don't see how any company can demand a 2019 tax return since those aren't due until July 15th?

[RadioRob]

I asked a LO friend of mine that question... he said they can use 2018's return still. The challenge is if there was a huge difference in income between 2018 and now. If 2018's income was 100K but you say it's 300K, that's a problem. They might deny you until you can provide a new return showing closer to what you claim. Or they might accept multiple months of bank statements.

[HappyGoLucky4U]

That's really useful to know, thank you RadioRob!  Does your LO contact happen to know if they end up disqualifying my early withdrawal distraction I made this year as part of my gross income, would they just recalculate what is usable and offer a credit based off of that?  Or would they just stop the progress and just deny without recalculating?  Thank you again