The Biggest Mistake You’re Making on Your Credit Card Application


It can be painful to have your credit card application rejected. Besides losing out on any rewards and benefits that you had hoped for, being denied a credit card can feel like your entire financial history has been judged and found inadequate.

And while some applicants simply lack the credit history necessary to be approved for a particular card, others make a common mistake that results in their application being rejected. Simply put, most credit card applicants fail to report all of their eligible income.

Income Sources When Applying 

When asked to list their income on a credit card application, many will count only their salary from full-time employment and omit other valid sources of income. For example, you can also include the income you earn from part-time work or from a small business or freelancing practice that you operated on the side.

In addition, most credit card issuers will allow you to include spousal and parental benefits such as alimony and child support. Applicants are also free to include income received from government payments such as Social Security benefits for retirement or disability. In fact, you can even include any income that you receive from your own investments such as your 401K or other retirement savings accounts.

Using Someone Else’s Income

In addition to counting all of your personal income from various sources, you can also include your household income on credit card applications, provided that you have a reasonable expectation of access to it. The CARD Act of 2009 was actually amended for this specific purpose after it was found that non-working spouses had been unable to qualify for a credit card in their own name.

Furthermore, household income can even extend beyond your spouse to include other family members, such as those in multigenerational households. For example, someone who lives with an adult child or with their parents or grandparents could also include any income used by the household. And as with your own income, you can count all of the sources of income from each member of your household, so long as you have a reasonable expectation of access to this income to pay for your credit card bills.

Net Versus Gross Income

Another reason some people underreport their income on credit card applications is that they use their net income instead of their gross income. Your gross income is total amount of salary or wages that you are paid by your employer before any deductions for benefits, taxes or retirement savings. And as any first-time wage earner quickly realizes, the difference between your gross income and what you actually receive in your regular paycheck can be dramatic.

Putting It All Together

Even if you don’t intend to carry a balance (and it’s a best practice not to), a credit card application is essentially a request for a loan. Thankfully, credit card issuers and government rules allow applicants to use their total gross income from many sources, including other household members. By taking the time to add up all of these potential sources of income, and including the total on your credit card applications, you can avoid this common mistake and increase the chances of being approved for your next card.

Of course, it’s in your best interest to apply for a credit card that you can afford to have in your wallet and fits your spending habits. And, no matter what card you choose (or your income), you’ll want to check your credit before applying since you’ll still need a good credit score to qualify for the best terms and conditions. (You can view two of your scores, updated every 14 days, for free on

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The Real Reasons You Were Rejected for a Credit Card


Many consumers dread being turned down for a credit card. But what you may not realize is that you actually can control a great deal of the factors that go into the credit issuer’s decision. Of course, it’s hard to get issuers to explain their criteria because it’s essentially their secret sauce, or how they do business.

But after speaking with Eric Lindeen, vice president of marketing for ID Analytics in San Diego, California, which offers fraud prevention tools and credit risk management scores to issuers to help them manage portfolios and onboard consumers effectively, we got the inside scoop on how it all works. Read on to learn why you may have been rejected — and what you can do to avoid it.

1. Underwriting Practices Vary

“Different institutions have very different practices,” Lindeen said. Depending on where they rest on the totem pole, their underwriting process could be more or less complicated analytically. Big issuers, for instance, “could be using hundreds of variables to determine [whether to take on a borrower],” while at smaller institutions, the process may be much simpler. “There’s basically an income threshold you have to reach and a credit score cutoff, and that’s all there is,” Lindeen said.

2. Your Credit Score Stinks 

“Realistically, there are only a couple levers that a bank or credit issuer has to work with,” Lindeen said, and one of those is the consumers’ credit risk, which is usually correlated with their credit score. The higher the score, the less likely they’re perceived to be a liability or get rejected, he continues, “and generally the [annual percentage rate] is going to be tied to how much credit risk there is for the consumer.”

Interestingly, large issuers have several APR “bands,” or groups, that they lump consumers into based on their credit score, Lindeen said. And “they’re going to slot you according to whatever risk you represent based on past behavior.”

Smaller institutions, by contrast, may only have two APR bands, which means consumers with poor credit may be able to qualify for a card, whereas they’d likely get rejected by a larger institution. “The smaller organizations have a bigger pool of people in a single risk band, so there are more people with better credit subsidizing those with poor credit,” Lindeen said.

3. Your Income Fell Short 

Another factor that makes a big impact in whether a consumer is approved for a card or rejected is the consumer’s income and probable spend on their credit cards. Typically, the more you earn, the more you can spend, and issuers make money based on merchant interchange fees from this spending. “If [an issuer] sees someone that’s going to have a significant amount of spend, that will be a more profitable customer, so they’ll be willing to lower their APR or increase benefits in order to attract them,” Lindeen said.

What to Do 

To help reduce your odds of being rejected for a credit card in the future, taking charge of your credit now is key. So if you don’t know where your credit stands, it’s a good time to find out, as doing so can help you determine whether you can take out other financing as well. (You can view two of your credit scores, updated each month, for free on

If something looks suspicious or is flat-out inaccurate (think misspelled names and wrong addresses) get in touch with the credit bureau in question to hammer it out. Disputing errors on your credit report is one thing you can do to help beef up your score.

From there, you can make a game plan to get any debt and monthly payments in check. Consistently making payments on time can help improve your score while paying down outstanding debt can help lower your credit utilization — how much debt you carry on credit card(s) relative to their limits — which lowers your risk of default in lenders’ eyes. Credit experts generally recommend carrying a balance below at least 30% and ideally 10% of your limit for the best scoring results.

[Offer: Your credit score may be low due to credit errors. If that’s the case, you can tackle your credit reports to improve your credit score with help from Lexington Law. Learn more about them here or call them at (844) 346-3296 for a free consultation.]

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