Using Household Income for Credit Card Applications

By: Julie Szpira

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A few weeks ago, I was having dinner with a friend and her husband. We were talking about frequent flyer miles, credit card points and sign up bonuses (my favorite topics), and I asked if they had each signed up for the Chase Sapphire Reserve.

My friend said “No”, and explained that since her husband was in school, his student income was too low to apply for credit cards.

We were thankfully in a loud restaurant, because I pretty much screamed, “You’re married! You can use HOUSEHOLD INCOME!”


What Counts as Income

Prior to 2009, credit card companies were generous in their credit card approvals. Almost everyone was approved, and huge credit lines were extended to some that did not have the ability to pay the bill. This resulted in many people experiencing default, bankruptcy and ending up with terrible credit scores.

In 2009, the Credit Card Accountability Responsibility and Disclosure Act (CARD Act) became law. It requires credit card companies to assess an applicant’s ability to pay, before opening a new account or increasing an existing credit line.

Now, an individual’s income is an important factor in determining approval and the credit that will be extended to that applicant. Income is counted as funds to which an individual has a reasonable expectation of access.

Your income includes:

  • Personal Income (like salary, tips and commissions)
  • Stipends and Gifts
  • Trust Fund Distributions
  • Retirement Fund Distributions
  • Social Security Income
  • Scholarships and Grants
  • Income from a Household Member


Income from a Household Member 

If you are a stay-at-home parent or partner, you might be thinking, “I wouldn’t qualify for a credit card under the CARD Act because I have no income.”

However, credit card companies know that the person making money, might not be the person who is spending money.

Thanks to an amendment to the CARD Act, married couples or domestic partners, over the age of 21, with access to joint accounts are allowed to report the combined income of the household on credit card applications.

This allows each partner to apply for credit cards and maintain individual credit histories.  Since you are sharing access to bank accounts with your partner, you can report the combined total of your incomes as “income” on your credit card application.

The household income amendment also allows students, over the age of 21 and living at home, to apply for credit cards using their parent’s income, provided there is a reasonable expectation of access.

If the student does not have access to the full amount of the parental income, the portion of income the student does have access to should be listed on the application.


What Doesn’t Count as Household Income

A group of people living under the same roof is not necessarily a “household”.  Four roommates sharing a living space, but maintaining separate bank accounts would not be eligible to report their household income on a credit card application.

It is not reasonable to expect access to a roommate’s bank account, so in this case, the income of a household member should not be included on an application.


Benefits When Applying for Credit Cards

The amendment to the CARD Act permits people who were previously ineligible to apply for credit cards to open accounts and enhance their personal credit history.

Students with low income or no income are able to begin building a credit profile.

In terms of maximizing travel, families are now able to have each partner open new credit cards, which doubles points-earning potential.

This means accruing points and miles happens faster, more trips can be planned, and more memories can be made.


Bottom Line

If one of the circumstances applies to you, don’t forget to list your household income on credit card applications! If you DON’T, you’ll just be hurting your chances of being approved for no reason.

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