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- Lying on a credit card application is a form of fraud and can have serious legal consequences.
- There are credit cards available for all types of financial circumstances, including for those with poor or non-existent credit, as well as for people post-bankruptcy. In other words, you shouldn't need to lie to qualify for a credit card.
- Consider becoming an authorized user or other ways to improve your credit so you can qualify for the card you want in the future.
Having access to credit opens purchasing doors and financial options, but you have to qualify for it to realize those opportunities. Your income and credit history are factors that determine how much credit you can receive from a lender, and sometimes, financial wants don’t match up with reality.
It can be tempting to stretch the truth when you fill out a credit card application so you can get a better home, a newer car or a bigger loan, for example, but lying on your credit card application can have serious consequences.
How a credit card application works
When you apply for a credit card the lender will ask you to complete a form that includes your personal and financial information. By filling out the form, you provide the lender with a snapshot of your current and past credit history, which the issuer will use to determine whether you qualify for the card and, if you do, to set your APR and credit limit.
Before approving your application, lenders will consider details like:
- Your income
- How much you pay in rent or mortgage
- Your employment status
- Your debt-to-income ratio
- How many credit cards you’ve opened recently
Based on these details, the bank can evaluate your financial standing and determine how likely you are to repay what you borrow.
What happens if you lie on an application?
A credit agreement is a legally binding document, regardless of whether it’s completed online, in person or over the phone. When you apply, you must attest that the information you provide is correct. If it is not, you could face serious penalties.
- Being unable to file bankruptcy or charge off debts
- Owing immediate repayment of the loan
- Receiving criminal charges, punishable by fines of up to $1 million and a maximum of 30 years in jail
- An inability to secure future credit or loans
Your lender may assess its own penalties, as well. For example, LendingClub demands that you repay the loan in full immediately.
If you aren’t caught, lying on your application may not directly impact your credit score, but it can encourage irresponsible financial habits that do. For instance, if falsifying your income leads to a credit limit beyond your means, you may be tempted to spend more than you’re able to pay back. This sort of behavior leads to significant debt. If this debt becomes unmanageable and you skip payments or default, it will negatively impact your credit score.
Will lenders check my information?
Not all banks will take the time to verify your application details.
Lenders of same-day loans, for instance, don’t have the time to invest in in-depth investigations. Many of these lenders don’t even perform a hard credit check, opting instead for a soft pull (if any at all). It can be easy for false information to slip through the cracks. Lenders generally only pull credit information when they are dealing with larger loan requests.
The digital age has also made the screening process much smarter and more efficient. Today’s latest banking software carries built-in features that can detect irregularities in client data and flag the application for follow up.
How you are caught lying on credit card applications
The Credit Card Accountability, Responsibility and Disclosure Act of 2009 — commonly called the CARD act — provides better protections for lenders by clarifying the parameters regarding credit card applications and the disclosure of personal data. This legislation puts added pressure and responsibility on banks to procure the correct kind of detailed information from their customers before they hit the “approved” button.
Your bank can come to you at any point over the life of your account and request updated proof of income as part of your annual credit review. Submitting this proof can contradict the income you disclosed on your application, which will prompt your issuer to launch an investigation.
If you are unable to repay debts you accrued from an unaffordable credit limit, you may also have no other choice than to file bankruptcy. Bankruptcy can be a major red flag for lenders who want to know why you can’t meet the terms of repayment. After filing, lenders will likely launch an investigation and you could be required to submit detailed financial data, including your proof of income. That proof of income will refute the false information you entered on your credit application and provide all of the evidence needed for legal charges.
What counts as income on credit applications
Financial institutions consider a variety of income sources when assessing your application. Eligible sources include regular salaries and wages, bonuses, tips, commissions, interest and dividends, retirement benefits, public aid and even alimony or child support payments.
Banks may also consider income that you have reasonable access to. For instance, a joint account with regular deposits that you share with another person. The bank might count those deposits as part of your income, even if they belong to the other person. For instance, if you’re a stay-at-home parent and don’t generate income personally, you can still claim household income on your application if you’re over the age of 21.
Applicants between the ages of 18 and 20 have even stricter proof-of-income requirements and cannot claim household income even if they are married and sharing accounts.
In any case, you should exclude any income that’s inaccessible to you, like garnished wages or specific tax debts. It’s crucial to report your income accurately, in line with the bank’s guidelines, to avoid potential consequences.
Alternatives to lying on a credit card application
Rather than lying on your application, consider these other options that are legal, effective and more responsible.
Become an authorized user on someone else’s account
You can also choose a trusted party who has a good credit score and doesn’t mind adding you as an authorized user. Doing this can get a credit card into your hands more quickly, help you establish a strong credit history and enable you to reap the benefits of good credit no matter your score. Just remember to only become an authorized user alongside a person you trust to handle their card responsibly. Their financial behavior with the card can impact your credit, both positively and negatively.
Apply for a secured credit card
A secured credit card offers a higher approval rate because it requires collateral to ensure that you don’t bite off more than you can chew. If you apply for a secured credit card, you’ll owe an initial security deposit that usually doubles as your credit limit. You then use your credit card and make your monthly payments like normal.
Line of credit
Instead of a credit card with a high credit limit, you could instead explore a revolving line of credit. This is a continuous cycle of credit that you can reuse as you pay it off, so you never become buried in debt you can’t repay.
Home equity line of credit (HELOC)
If you own your own home, you could tap into the existing equity to get yourself the credit that you need. A home equity line of credit is similar to a line of credit, but it uses your home as collateral.
The bottom line
It is never OK to lie on a credit card application; you may not get caught, but the consequences could be severe if you are. Furthermore, credit card companies institute certain limits based on your financial situation, and these limits can protect you from taking on more debt than you can handle.
Even if you can’t get exactly what you want with a credit card right now, there are plenty of ways to improve your credit so you can get the things you need at rates you can afford. Be sure to make all of your credit card and loan payments on time, and try to work on your debt-to-income ratio so your application is more attractive to potential creditors.
If you don’t qualify for the credit card that you want today, focus on improving your credit via the avenues that are available to you. With responsible habits, you’ll work your way toward the card you want in the future.