Why do most credit card issuers only ask for income but not assets?

Aznsilvrboy wrote: ↑ Why do most credit card issuers only ask for income but not assets?

Because it's easy to verify your income with one phone call?

They ask for income as the assumption is; the greater the income, more you'll spend on your card earning the issuer more in fews billed to the merchant.

ace604 wrote: ↑

Aznsilvrboy wrote: ↑ Why do most credit card issuers only ask for income but not assets?

Because it's easy to verify your income with one phone call?

How so? Which employer will verify their employees income?

Of course they look at assets. I have a friend who doesn't have any income but she was able to obtain a mortgage for a million dollars.
She has 1 million dollars in Cash in her bank account. And she used that as leverage to borrow the same amount.

CollegeGraduate wrote: ↑ Of course they look at assets. I have a friend who doesn't have any income but she was able to obtain a mortgage for a million dollars.
She has 1 million dollars in Cash in her bank account. And she used that as leverage to borrow the same amount.

Does your friend live in Canada? There are things called debt service ratios that you have to meet. Is that a million dollar mortgage on a $1.1M property or on a $3M property. There's a big difference.

boyoflondon wrote: ↑ They ask for income as the assumption is; the greater the income, more you'll spend on your card earning the issuer more in fews billed to the merchant.

ace604 wrote: ↑

Aznsilvrboy wrote: ↑ Why do most credit card issuers only ask for income but not assets?

Because it's easy to verify your income with one phone call?

How so? Which employer will verify their employees income?

Some hyperbole, but you can verify if someone is lying pretty much via their credit report and a call to verify employment if necessary.

Let's just say it's easy to lie about assets and harder to lie about employment details.

How much do you make? What is your job title? Where do you work? How long have you worked there? What is their phone #?

If you lie on the first without lying on the other 4 it will be clear you are lying without a phone call. If you lie about any of the last 4 that's easily verifiable.

e.g. "I make $90k, I work as a fry guy at McD" lying.
"I make $30k, I work as a teller at ABC Bank, branch 1234, phone # xxx"
Plausible

You can verify employment info with credit report, assets not so much.
They have a pretty good idea of salary ranges based on employer, length of employment, age ... if things seem fishy they can follow up.

Job history is on your credit report. Lying sets off warning signals.

CollegeGraduate wrote: ↑ Of course they look at assets. I have a friend who doesn't have any income but she was able to obtain a mortgage for a million dollars.
She has 1 million dollars in Cash in her bank account. And she used that as leverage to borrow the same amount.

Prime example right here why one should never rely solely on anything said on a public forum. Some people just get a rush I suppose, posting erroneous information like this.

ace604 wrote: ↑

boyoflondon wrote: ↑ They ask for income as the assumption is; the greater the income, more you'll spend on your card earning the issuer more in fews billed to the merchant.

ace604 wrote: ↑




Because it's easy to verify your income with one phone call?

How so? Which employer will verify their employees income?

Some hyperbole, but you can verify if someone is lying pretty much via their credit report and a call to verify employment if necessary.

Let's just say it's easy to lie about assets and harder to lie about employment details.

How much do you make? What is your job title? Where do you work? How long have you worked there? What is their phone #?

If you lie on the first without lying on the other 4 it will be clear you are lying without a phone call. If you lie about any of the last 4 that's easily verifiable.

e.g. "I make $90k, I work as a fry guy at McD" lying.
"I make $30k, I work as a teller at ABC Bank, branch 1234, phone # xxx"
Plausible

You can verify employment info with credit report, assets not so much.
They have a pretty good idea of salary ranges based on employer, length of employment, age ... if things seem fishy they can follow up.

Job history is on your credit report. Lying sets off warning signals.

You can ask applicant to provide proof of assets. It's no different than asking them to provide proof of income which many already do.

Aznsilvrboy wrote: ↑ Why do most credit card issuers only ask for income but not assets?

I am guessing while also trying to look at this from the perspective of a credit card issuer:

Do I want to take you to court to force you to liquidate an asset to pay me back?

If a person has a steady source of income, they are very likely to service their debt through at least a minimum payment. There is much less certainty however that they're willing to sell their car or sell their house to pay me back. Furthermore, once you've sold those assets and spent the cash, we're now back to the same place: no income and now, no assets.

An income provides a steady source of repeating spending. People with jobs tend to make their minimum payments.

For CCs specifically, they're interested in your spending potential, which is usually tied to your income, not your assets.

In the US, they're more interested in your credit score, which once again, has more to do with your ability to pay back debt rather than what you own.

vkizzle wrote: ↑

boyoflondon wrote: ↑ They ask for income as the assumption is; the greater the income, more you'll spend on your card earning the issuer more in fews billed to the merchant.

ace604 wrote: ↑


Because it's easy to verify your income with one phone call?

How so? Which employer will verify their employees income?

The only bank to date, that required income verification from me, was Scotia for the Momentum Visa Infinite and that was bringing in two paystubs to a branch.

RBC wanted my dad's T4 in order to remove my mom as an authorized user. We even had to go to a branch to present it. Huge pain in the rear given what he was looking to do. Needless to say, he ditched them soon after.

boyoflondon wrote: ↑ RBC wanted my dad's T4 in order to remove my mom as an authorized user. We even had to go to a branch to present it. Huge pain in the rear given what he was looking to do. Needless to say, he ditched them soon after.

I think your Dad may have misunderstood. It sounds like she was actually listed as a joint user rather than an authorized user. A joint user has their profile checked carefully by a creditor, and risk is evaluated according to both users. An authorized user is entirely the responsibility of the prime account holder.

uber_shnitz wrote: ↑ For CCs specifically, they're interested in your spending potential, which is usually tied to your income, not your assets.

In the US, they're more interested in your credit score, which once again, has more to do with your ability to pay back debt rather than what you own.

OP is asking why a guy with $1million in stocks and 0 income cannot get approved with a $5,000 credit card whereas a guy with $15,000 /year income and no assets can get approved with that credit card.


1. And OP I think if your home bank (BMO, TD, RBC, Scotiabank) is able to see your assets, they will approve you.

I've been denied credit cards from Chase, Capital One, etc but when I applied for a credit card in my bank, they approved it without even doing a credit check on my file.


2. I think it's because most individuals don't have much assets so it would be a waste of time to put that on the questionnaire.
The really wealthy individuals...Bill Gates/Warren Buffet probably don't care enough for churning credit cards anyways or they call up the senior director of Capital One to obtain a card.

what always has me ensure is that i am not sure i ever got one application where they define Income. I'm just looking at the TD aeroplan application which has 18 footnotes, not one regarding their interpretation of Income.

For credit cards it would be due to cash flow.

If you make $120,000 a year, you're making 12k/month, take home over 9k, spend roughly half because you're an idiot. Credit card company knows you're going to put 2k to 5k a month on the card.
For comparison if you make 36k a year, that's only 3k a month, 2.4k after tax man, you'll spend at most 0.5k to 2k on your credit card a month, they make less money off you (in merchant fees).

In either case there are risks associated with how much you make, vs being able to pay it off, but that's what they use to set your limits. If you have no credit cards they will give you a larger limit. If you've got 2 credit cards and you want to open a third and only make 36k a year they know you're either not going to use theirs as much, or youre about to max the other 2 and theirs. So likely you'll get declined.

As well, assets don't play a heavy roll in this because you aren't going to sell your house to pay your overdue credit card bill and they know that. They will factor in how large your mortgage is based on your income, again because if you've got a 800k mortgage and you make 36k a year, they will know you've in over your head and won't want to take the risk and decline you. Vs say someone making 120k a year and renting (no mortgage) they will gladly extend a card to this person.

vkizzle wrote: ↑

foreigncontent wrote: ↑ what always has me ensure is that i am not sure i ever got one application where they define Income. I'm just looking at the TD aeroplan application which has 18 footnotes, not one regarding their interpretation of Income.

Depends on which card you are applying for.
I see the following from TD's website.

To be eligible to apply online, you must be:
Applying for a personal bank account in your name only
A Permanent Canadian resident
Age of majority in your province or territory
To apply for Joint Accounts or Youth accounts, please visit any TD Canada Trust branch.
To apply for Estate Accounts, an account with a Power of Attorney, and/or Trust Account, please visit any TD Canada Trust branch.

What information you will need:
In order to process your application easier, please provide us with the following pieces of information in order to help us quickly complete your application (where applicable):
Social Insurance Number (SIN - helpful but optional)

When applying for credit products you will be asked to provide:
Your Estimated Income (sources and amount)
Your Estimated Monthly Mortgage or Rent Amount
Monthly Estimated Payments (loans, credit cards, LOCs)

clearly no definition. they don't even refer to a CRA interpretation.
is last tax return fine, even though i had a non-recurring event?

i remember answering once, income on my last tax return was over $60,000, and that was deemed acceptable. (agent didn't even ask what year was my last tax return)