How do banks decide what Credit Limit to assign you?

[Dervrak]

Is it based solely on your credit score? I know virtually all Credit Card Companies ask for your income and employment on your application, but lets face it, you can put anything you want in the block (though you likely should be honest). But the thing is I've never had one single credit card company ever verify my income or employment, at least in any obvious manner. You put in the application, they run a credit check, and bam approved or denied. So does income and employment actually "matter"? Will a credit card company give you $50,000 in credit if your only income is a $700 disability check as long as you have a 800+ credit score? Or are they verifying income in some mysterious manner I'm unaware of?

[AverageJoesCredit]

They do have ways to have a general idea of your income so i would never try to over exaggerate it. Too much data out there about us to think they cant verify us in one way or the other

[Anonymous]

There are sources they can use to check how much you’re getting paid and they can come shockingly close to figuring out your income based on your spend habits with credit accounts as well. 

Its possible to get a surprising amount of credit with low income (my limits are close to 4 times my annual income), especially if you have a high score and low DTI, but income is definitely a factor. I will never see $25K from NFCU, for example, but they’re comfortable with $15K. 

[Jnbmom]

First and foremost never lie about your  income.

Creditors factor in alot when granting approvals, it's not just score based. Your credit profile and income and your DTI will all be considered.  But no you will not get a 50K line on a very limited income even with high scores.

[Anonymous]

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@Dervrak wrote:

Is it based solely on your credit score? I know virtually all Credit Card Companies ask for your income and employment on your application, but lets face it, you can put anything you want in the block (though you likely should be honest). But the thing is I've never had one single credit card company ever verify my income or employment, at least in any obvious manner. You put in the application, they run a credit check, and bam approved or denied. So does income and employment actually "matter"? Will a credit card company give you $50,000 in credit if your only income is a $700 disability check as long as you have a 800+ credit score? Or are they verifying income in some mysterious manner I'm unaware of?

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Your credit score is simply the statistical probability that you will incur a major derogatory in the next 24 months.  Stated another way, your score estimates whether you will have a 90-day (or worse) late payment in the next 24 months.  The higher your score, the less likely you are to have a major derogatory. That's all it is.

Consequently, lenders look at much more than just your credit score; they evaluate your entire credit profile especially since they know that a credit score can be manipulated through things like authorized user accounts.

Lying about your income and employment on a credit application is federal bank fraud (18 U.S. Code, Section 1014) and banks have a variety of ways to cross-check and verify the information you provide.

Federal law requires you to provide your income to lenders (CARD Act of 2009 and Regulation Z issued by the Consumer Financial Protection Bureau).  There are several "consumer reporting agencies" that provide information to lenders that can be used to verify the information you provide.  Apart from the three major credit bureaus, there are businesses like LexisNexus that create comprehensive records on each consumer and The Work Number (Equifax) that compiles employment history.  Some lenders also require you to submit IRS Form 4605 so they can verify your income directly from the IRS.

And no, you will not get a $50,000 credit limit with a monthly income of $700 even if your credit score is 850.  The reason federal law requires lenders to ask about your income is so they can assess your "ability to repay."  The "ability to repay" would be significantly limited by a monthly income of $700.