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Lying on credit card applications: What happens?

Boosting your annual income figures can cost you more than it’s worth.

Lying on a credit card application may sound like a harmless way of getting a higher credit limit or getting a better credit card. But, the truth is, it’s illegal and the consequences can be severe.

What happens if you lie on a credit card application?

It depends on the lie. Suppose your annual income is $60,000 and you claim you earn $65,000 in your credit card application. While you shouldn’t lie on your application at all, a smaller lie like this likely won’t matter as much.

But let’s say you earn $15,000 annually and claim to earn $90,000. Chances are high you’ll get caught.

Lying about income is the most common lie, but some individuals lie about the mortgage or rent they’re paying and others lie about their employment status or debt. All these lies fall under loan application fraud, which is punishable by law.

Will card issuers find out if you lie on your application?

Banks receive thousands of credit card applications each day, and, in most cases, they won’t bother to verify your income. You could raise a red flag if you say you work for a certain job where the median salary is known, but you provide annual income twice as that. However, it can prove good practice keep your listed income up to date, even on your existing card accounts.

The only way you could end up in trouble is if you declare bankruptcy. In this case, card providers may investigate how you got your credit limit without the ability to repay it. If they find out you lied, bankruptcy will be the least of your problems. Overall, the potential consequences of getting caught are not worth the lie.

How will lying on a credit card application affect you if you’re caught?

Best case scenario — your application is declined and you’re flagged for future applications at the provider.

At worst? You could pay up to $1 million in fines and serve up to 30 years in prison. Not worth it.

Can you be convicted of fraud?

This mostly depends on the severity of the lie and the situation. In most cases, you won’t be fined for $1 million or serve up to 30 years in prison. However, lying on your credit card application is considered fraud, and because of that, you can be convicted.

Why do card providers care so much about the applicant’s annual income?

It’s not like card providers want to snoop. With the Credit CARD Act of 2009, they are required to know your ability to repay your debt. Based on your income and other factors, providers can determine the size of your credit limit.

If your card provider asks you to update your income once you receive your credit card, they may be considering to increase your credit limit.

Credit cards to help you build or rebuild credit

Instead of lying on your credit card application, consider applying for a more suitable card for your situation. Typically, this includes secured cards for building credit because they come with low fees. Once you’ve improved your financial situation, apply for a more premium credit card and enjoy the benefits.

Bottom line

Lying on your credit card application is illegal and you could get fined and end up in jail. Instead, be honest on your application. If a credit card is out of your reach, consider applying for a credit card that’s closer to your financial situation.

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