What Happens When You Lie About Income On Credit Card Applications?

Finance1 year ago
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When you apply for a credit card account, you will be asked to provide a host of information about your identity, employment, and income. This information is necessary for credit card issuers to decide whether they should approve your application and how much credit they should extend.

Information that a credit card issuer is likely to ask for includes your annual income, your social security number, your current rent or mortgage payments, and other relevant financial information.

The higher your annual income is, the better the odds are that you will be extended a higher credit line. But does that mean you should lie about your income on credit card applications? And what are the consequences if you get caught?

Our article below will tell you everything you need to know about providing your annual income when you apply for credit and the possible consequences of committing loan application fraud.

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Should You Lie About Your Income on a Credit Card Application?

If you provide inaccurate information about your financial situation on your credit card application - you are committing fraud.

When you submit your card application before you submit, you will be asked to check a box that states that to the best of your knowledge, the information you have provided is correct.

The consequences of this can include facing up to $1 million in fines or even a maximum is 30 years in jail!

Even if you don't get caught, by applying for a credit limit you have no way of covering, you could find yourself in a substantial amount of debt and damage your credit report and credit score.


Do Credit Cards Ask For Proof Of Your Annual Income?

Generally, a card issuer may not ask for verification of your income by accessing your bank account or proof of income via pay stubs or checks. But legally they can!

The Credit Card Act of 2009 requires that credit card issuers determine whether someone applying for credit is in a financial situation where they can pay back the money they owe.

This is why issuers will ask for information about your income, rent or mortgage, social security payments, and employment details. This information helps them to determine whether you are in a place to pay back what they lend.

Lying on a credit card application can result in larger credit limits being issued than you are willing to pay back. If you overspend this could have disastrous results for your score and annual credit review.

If you lie about your level of income on your application, discrepancies may raise red flags with an issuer. For example, if you claim an outlandishly large income for your current job position or an amount that strongly conflicts with your submitted tax return - you can run into trouble.

Technology and banking processes have progressed and developed over the past few decades that can support a credit card company in checking submitted data and flagging financial information that doesn't make sense.

Even if you manage to make it through the approval stage, there is nothing to say that an issuer may not undertake periodic checks while you have the account.


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What Happens if You Lie On Your Credit Card Application?

As we stated above, the potential harsh consequence of lying when applying for a credit card means that you should avoid doing this at all costs.

In 2012, a man in Rochester was fined $46,914.73 by the government after lying about his income on his credit card applications. His tax return to the IRS reported that he had $12,488 income, however, his card applications stated that he made between $90,000 to £122,000 annually. He was also sentenced to the time he had already served and supervised upon his release.

He was convicted years after submitting his applications, which stands as a grave warning to those who think they may have gotten away with fraud just because their application was approved.

If you have chosen to lie on your credit card application, it is because realistically you do not have the means to pay back the amount of money you are asking to lend.

If you overspend up to credit limits you have no hope of covering, this action can haunt your financial status for years to come. if you fail to pay back what you owe month on month, you can quickly find yourself mired in debt you don't have the resources to pay back.

And if you fall into debt to the point of bankruptcy, any lies or misinformation you provided when applying for your card will come to light. This will leave you open to legal prosecution and fines to add to your current financial problems.


How to Access Higher Credit Limits

If you are considering lying on your application for a credit card, it is because you want access to either credit card approval or a larger credit limit. But the legal and financial consequences should be enough to put you off this action.

There are some other options you should consider if you want to improve your chances of credit card approval that will not lead to legal implications later down the line.


Become an Authorized user on a Credit Card

If you currently don't have a credit score, credit history, or income that will support a successful card application, you can consider becoming an authorized user on the account of a family member you trust.

You will receive a card that has your name on it, and if your fellow card user maintains a good credit history - your own score could benefit as well! However, you should make sure that you and your co-owner have a clear idea of how much you can spend, as you could affect a primary user's credit if you cause debt through overspending.


Apply For a Secured Credit Card

If you have a bad credit score or a low income, then applying for a secured card may be a good option. You will be asked to make a security deposit on the card which decreases the financial risks for the issuer as this deposit becomes your credit line. And the debt will be covered if you fail to pay your monthly bill.

If you don't touch your deposit and develop a history of paying your bills on time - you should see an improvement in your credit score and may find that you can successfully apply for higher credit limits.


Takeaway - What Happens When You Lie About Income on Credit Card Applications?

You should avoid lying on your credit card application at all costs. Although the bank may not initially verify your claims, you can be caught at any time and potentially face up to $1 million in fines and 30 years in jail.

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