Filling out a small business credit card application usually isn’t all that hard. It starts by asking you to supply your name, address and other contact information, and then there are usually a few questions about the type of company you have, and its size. They will ask to see a business credit report and they will pull a business credit score for your business. But within all of these boilerplate questions is one that often throws you for a loop: What is your annual income?
There’s a good reason why a bank or credit union needs to know your personal income when you apply for a new small business credit card account. Your credit cards, either business or personal, represent a loan that is being extended to you. In fact, a small business credit card account, like a consumer card, requires that you offer your personal guarantee of repayment.
By providing your personal income on an application, the credit card issuer can decide if you are able to repay the loan, and how large of a line of credit it should offer you.
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What income should you report?
Most small business credit card applications will ask you for your business’s annual revenue as well as your personal income. When being asked for your personal income, you can include many different sources. Of course you can include your business profits that you report as personal income, even if it’s just a part time job or a “side hustle.” And if you have multiple businesses, you can include your income from all of them.
In addition, you can include your income from any full- or part-time employment that you have. Other eligible sources of income can include alimony, child support, and investment income as government benefits like Social Security and disability. You can even include the income of your spouse or domestic partner, so long as you have a reasonable expectation of access to their income for the purpose of repaying the loan. Add up the total of all of these sources of income, and that’s what you can report on your application. The more income you can report, the better your chances of being approved, and the larger your credit line may be.
What about reporting income from a new business?
When it comes to reporting income from a newly created business, you want to use the same standard you would if you had a new job. For example, if you have a job that pays you $5,000 per month, then you can report $60,000 a year as your annual income, even if you just started.
Likewise, if your new business has been earning $1,000 a month in profit that you report as income, then you can include an additional $12,000 of annual income on your credit card application. The age of your business is not as important as the amount of income that you currently receive from it. However, it would not be accurate to report your annual income based on projections of future earnings. Instead, you should use your most recent month’s income from your new business as the basis of your estimated annual income.
The bottom line.
“What is your personal income?” sounds like a simple question, but it can actually be quite complicated to arrive at the correct answer. By combining your business profits with other sources of personal income, you can provide the most accurate answer possible and receive the small business credit card you deserve.
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This article was originally written on November 13, 2017 and updated on October 25, 2019.
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FAQs
Credit card issuers generally don't verify your income
While you probably won't be taken to court for it, Dailey says it could hurt you if you end up defaulting and are trying to work out a payment plan with your card issuer.
Do credit cards actually check your income? ›
Credit card issuers generally don't verify your income
While you probably won't be taken to court for it, Dailey says it could hurt you if you end up defaulting and are trying to work out a payment plan with your card issuer.
When credit card companies ask for your income? ›
Yes. Before granting credit to you the card issuer may ask about your income so they know whether you can pay the required minimum periodic payment. The card issuer may also ask about your age so they know you are old enough to have the legal ability to enter into a contract.
What should I say my income is for a credit card? ›
You will need to report your gross income on a credit card application. That's your annual salary before taxes and other deductions.
Why does Chase want to know my income? ›
Keeping your income up to date helps us evaluate your account for future needs and special offers such as credit limit increases, balance transfers and lower APR loans.
Should I let my credit card company know my income? ›
You may also want to report your new income to your card issuers whenever your income increases, as the higher income might prompt them to raise your credit limit.
Should I tell my credit card company my income? ›
The only time that you're required to provide your income is during the credit card application process. Providing accurate income information is part of getting approved for a credit card. From then on, it's up to you to keep the card issuer in the loop in regard to your income.
What is a good annual income for a credit card? ›
A good annual income for a credit card is more than $39,000 for a single individual or $63,000 for a household. Anything lower than that is below the median yearly earnings for Americans. However, there's no official minimum income amount required for credit card approval in general.
What happens if you put wrong income on a credit card application? ›
Application denial: If the credit card issuer discovers incorrect income information during the verification process, they may deny your application. Lying on a credit card application is considered fraudulent and can result in immediate rejection.
Should I share my income with my credit card company? ›
You aren't obligated to provide information about your income to a credit card issuer unless you are applying for a new card or requesting a credit limit increase. Responding to a card issuer's inquiry about your current earnings can have its benefits if your pay has increased.
How income affects credit card applications. Broadly speaking, there is no minimum income requirement to get approved for a credit card, as long as your income could easily cover the minimum payments on a relatively small credit line.
Why do credit cards ask for gross income? ›
Why? Your income data gives issuers another data point (in addition to the information on your credit report) to determine your ability to keep up with credit card payments before they approve your application.
What is a good annual income for a single person? ›
An individual needs $96,500, on average, to live comfortably in a major U.S. city. That figure is even higher for families, who need to earn an average combined income of about $235,000 to support two adults and two children.
Why does my credit card want to know my income? ›
In fact, credit card issuers are required by law to request financial information (including income) on credit card applications to make sure the consumer makes enough to pay for their purchases.
Do credit card companies verify your income? ›
Will a credit card company verify your income? Although a credit card company could ask you to provide income verification, this doesn't happen often. In most cases, the credit card company will take your word for it and use your reported income.
Why is Chase asking for my gross income? ›
Why do credit card applications ask for annual income? The Credit Card Accountability Responsibility and Disclosure (CARD) Act requires credit card companies to evaluate your ability to pay before opening a new credit card account or increasing your credit limit.
What happens if you lie about income to get a credit card? ›
When you add false information to a credit card application, you are committing a form of credit fraud, a federal crime that carries serious repercussions that could include: Being unable to file bankruptcy or charge off debts. Owing immediate repayment of the loan.
Does a credit check show your income? ›
When you review your credit reports, you'll see that there's no mention of income. Instead, your credit reports will show your payment history, current debts, your location and your employer. And if you've been involved in any lawsuits, arrests or bankruptcies, those may be listed too.
Do credit card companies check if you have a job? ›
Lenders typically ask for employer information on credit applications to help verify your identity but they're not obligated to report your job history to the credit bureaus.
