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TPG reader Anandi sent me a message on Facebook to ask about getting a new credit card:
“I started applying for the Chase Sapphire Reserve card, and it asked for my gross annual income. Could I include my husband’s income in that amount?”
Among the many factors that can affect your credit application, your income (and specifically your debt-to-income ratio) is one of the most important. Naturally, card issuers are more likely to loan you money if they think you can pay it back, so reporting a higher income will increase your chances of being approved. Fortunately, you may be able to include income on an application beyond what you earn personally.
The rules have changed several times over the past decade, thanks to the CARD Act of 2009 and later amendments made by the Consumer Financial Protection Bureau (CFPB) in 2013. The law says that if you’re 21 or older, then credit card issuers may take income from a spouse or partner into account, so long as you have a reasonable expectation of accessing it in order to meet your financial obligations. (If you’re under 21, then you can only report your own personal income.)
Basically, this allows lenders to look at your complete financial picture, which makes a lot of sense. If you earn $20,000 annually, and you share finances with your spouse who earns $80,000, then you’re more creditworthy than an individual who earns $50,000 (assuming all else is equal). Reporting a combined income of $100,000 represents your ability to repay more accurately than reporting an income of $20,000.
Some credit cards make it clear that you can include income from other people on your application. For example, the Chase Sapphire Reserve application states the following:
“Your gross annual income can include money received from several sources … If you are 21 or older and regularly use income from others to pay your bills, you can include that too.”
You’ll find similar language in plenty of other card applications.
The caveat to all of this is that while card issuers may take other income into account, it isn’t mandatory. A lot of applications ask for income generally — for example, the Alaska Airlines Visa Signature credit card application just requests your “total income” with no further instructions. I think it’s fine to include your household income in cases like that, but I wouldn’t do it if the application specifically requests your “individual income” or something similar. If you’re unsure about whether including your household income is allowed, you can always call the card issuer for clarification.
For more on card applications and other credit questions, check out these posts:
- 5 Things to Understand About Credit Before Applying for Cards
- How Do I Figure Out a Good Credit Card Application Strategy?
- Does Applying for a Card Permanently Impact My Credit Score?
Featured image courtesy of Shutterstock.
The Points Guy Assessment:
The Chase Sapphire Preferred is a great pick for the beginner and the frequent traveler. The CSP has superb travel benefits, double points on certain purchases, and a 50,000 point sign up bonus. The $95 annual fee is waived the first year so this puts it as one of the less expensive cards, while still allowing you to earn one of the most valuable point currencies.
- Earn 50,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $625 toward travel when you redeem through Chase Ultimate Rewards®
- Chase Sapphire Preferred® named a 'Best Travel Credit Card' by MONEY® Magazine, 2016-2017
- 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases.
- No foreign transaction fees
- 1:1 point transfer to leading airline and hotel loyalty programs
- Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 50,000 points are worth $625 toward travel
- No blackout dates or travel restrictions - as long as there's a seat on the flight, you can book it through Chase Ultimate Rewards