Credit Card Income Updates 101

What Credit Cardholders Need to Know

Sandra Parsons
MoneyTips Contributor

Borrowing Credit Cards

Credit Card Income Updates 101
January 22, 2019

When you apply for a credit card, the card issuer collects personal information, including your income. It's one of the factors they consider when deciding whether to approve or decline your application. If they do approve you, your income, along with your current debt load and credit score, helps them decide how high of a limit to assign you. Most people know this and expect to divulge their income when applying for a new card. You can check your credit score and read your credit report for free within minutes by joining MoneyTips.

But has your credit card issuer ever asked about your income after your card is approved and active? For many cardholders, this is murkier territory. Here's what you need to know about updating your income with your credit card issuer.

Facts

The first thing you need to know is that some credit card issuers ask their cardholders for updated income information from time to time, while others don't. Being asked (or not) doesn't necessarily mean anything about the quality of your account.

The main reason credit card issuers ask for updated income information is to make sure your credit limit aligns with your income. All other factors being equal, people with higher incomes are usually capable of managing higher credit limits.

Requests for updated income data generally occur through online banking channels, and compliance is usually optional. However, before you brush off the request, there are some implications you should consider.

Pros of Providing an Income Update

You Might Be Eligible for a Credit Limit Increase

If your income has increased since you opened your credit card account, you might benefit from a higher credit limit. If you let your card issuer know about your extra income, they may be able to raise your limit to meet your current needs.

"Credit card companies often ask you to update your income information once per year after you open your account," explains Priyanka Prakash, lending and credit expert with Fundera. "And even if they don't ask, you can voluntarily provide updated income information. One reason that you might be asked for income information is to see if you're eligible for a credit line increase. If you've paid your credit card bills on time and your income increases, then you could be approved for a higher credit limit. In fact, some credit card companies, like Citi, may instantaneously approve a credit limit increase if you provide updated income information online," reveals Prakash.

You Could Be Offered Additional Products

Reporting a higher income might make you eligible for other products your credit card issuer provides. For example, your bank might offer you another credit card, personal loan, or line of credit.

Cons of Providing an Income Update

Your Credit Limit Could Go Down

Unfortunately, incomes don't always increase. If your income has decreased since you applied for your credit card and you share that information with your provider, they might lower your credit limit.

"The downside is that if your income has decreased, the credit card company could lower your credit limit. Most of the time, card agreements allow issuers to lower as well as increase your credit limit," says Prakash.

That being said, a credit limit increase isn't always desirable – sometimes a lower credit limit is a safer bet. David Gafford, Co-founder of Shift Processing, a credit card processing company, cautions, "There's always a risk in obtaining a higher credit limit if you're prone to charge more than you can afford."

Your Info Might Be Shared

If you're concerned about the privacy of your personal information (and you should be), make sure you understand your provider's privacy policy. They may share your income data with partner companies – something you may want to consider when deciding whether to update your income.

Don't Fudge the Numbers

If you're tempted to exaggerate your income to secure a higher credit card limit, you should think twice. Your credit card issuer is unlikely to verify your income, but that doesn't mean the lie won't come back to bite you. It's possible that false income reports could be a barrier if you ever had to file for bankruptcy or need to negotiate payment arrangements on a defaulted account.

Credit Card Income Updates: Should You, or Shouldn't You?

At the end of the day, providing your credit card issuer with updated income information is usually in your best interest.

"Reporting your income accurately and regularly should help offer access to a convenient line of credit while keeping the risk of overwhelming credit card debt to a minimum," summarizes Sean Messier of Credit Card Insider.

If you want more credit, check out our list of credit card offers.


Photo ©iStockphoto.com/NikolayPeev

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