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I want to apply for a store-branded credit card that offers extra rewards for purchases made at that specific store. I have no intention of using this credit card elsewhere, I intend to pay it off it full each month, and I don't need nor want a high credit limit. (I have other credit cards that provide enough credit for my needs, and I'd prefer to limit fraudulent charges even though I know I wouldn't be responsible for them.)

Is it okay to under-report my income in hope to get a lower credit limit? Or would doing so work against me if the credit card company notices that my reported income doesn't seem to fit with what my credit reports state?

  • What's the application form actually say on it? "Total household income" or "Income you wish to have considered"? – Ben Voigt Jan 21 at 5:53
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    You can just have your limit lowered if you think it's too high. Under reporting your income may impair you being approved at all. – quid Jan 21 at 7:33
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Your credit report doesn't show your income, so you don't have to worry about a discrepancy if you under report. However, the bank probably will look at your existing credit lines and debts, and based on the income you report, determine if you can handle more, and if so, how much more. It's possible that you'll get closer to the credit limit you desire by under reporting your income, but there's also an increased (albeit small) chance you'll be denied outright. I'd recommend being honest, and if the limit ends up higher than you'd like, you could always call them up and ask them to reduce it. You could even preempt it by calling them before you apply to confirm you can lower the limit afterwards, or possibly even complete the application over the phone with your desired limit.

That being said, note that in general your credit score will likely end up being a little better if you keep the higher credit limit (because it lowers your overall utilization percentage). I can only think of two reasons to request (or wish for) a lower credit limit:

  1. You believe that one of the authorized users will be tempted to overspend with a higher limit.
  2. You believe that based on your other open lines, installment loans, and your income that a higher limit could preclude you from obtaining new credit in the future. (For example, as described in the first paragraph.) Admittedly, this is unlikely to occur for most people, and if it does happen it's easy to rectify (by closing or reducing any open line).

If it were me, I wouldn't go out of my way to lower a limit of one of my credit cards, but, the fact that you took the time to ask this question suggests that maybe you should, if simply for peace of mind.

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    A third reason is to limit your losses should the card be stolen / used fraudulently, if you don’t trust the consumer protections around this. I know someone who has two cards, one they use in person and one for online use with a very low limit. – Vicky Jan 21 at 9:18
  • @Vicky agreed. It appears both OP and I trust the protection provided by CCs, so that doesn't apply to us. But there was a time when I was more leary of it, and I even took it step further; I used virtual credit cards for all online transactions. Now though I have enough confidence that I don't bother anymore. – TTT Jan 21 at 14:22
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    In the US, your liability for credit card fraud is limited by federal law to $50. nerdwallet.com/blog/credit-cards/… Unless you're talking about getting a credit limit of less than $50, which seems unlikely, this isn't a real consideration. – Jay Jan 22 at 22:13
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    @TTT looks like only my citibank costco card, at least on the initial add-user form. – Kevin Jan 22 at 22:46
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    As I mentioned, I'd like a lower credit limit to limit fraud. While I know I wouldn't be liable for fraudulent charges, I'd prefer to not give more buying power to criminals and would prefer to limit damages to merchants. – jamesdlin Jan 22 at 22:46
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Hmm, but unless you know the bank's formula for calculating a credit limit, this would be a big guessing game. You have little idea what credit limit the bank would give based on your real income or on your fake income. If you're hoping for a credit limit of, say, $3,000, how do you know that that isn't what the bank would give based on your real income, and by understating your income they'll give you only $1,000, which you'd consider too small? Or based on your real income they'd give you $20,000 and on your understated income they give you $10,000, which is still more than you want?

Far simpler, I'd think, would be to call the bank and ask what credit limit they'd give you, and if the number they give is too high, ask for a lower limit.

I wonder why you're worried about too high a limit. Reasons that occur to me are, 1. you're worried that some authorized user on the card, a spouse or child or whatever, may run up too many charges, or 2. you're worried that you don't have the self control and you yourself will run up too many charges.

Generally having a large credit limit is good for your credit score, because an important factor in your score is what percentage of your available credit that you're using. I recently applied for 3 new credit cards within a few months to take advantage of special offers (50,000 bonus miles on an airline card, etc). I was a little worried that getting several cards in such a short period would hurt my credit rating, but in fact it went up. Part of the formula is the percentage of available credit that you're using. By getting a bunch of new credit while having the same total debt, my utilization percent went down so my score went up. (And just by the way, one of the airline cards gave me a credit limit of $30,000! Like wow, do they really think that if I ran up $30,000 on a credit card that I could ever pay it back? I wouldn't lend me that much money!)

  • Good point about the guessing game. Regarding why I don't want a high limit, it's not because of #1 or #2. As I said, it'd be to limit fraud. I know that I wouldn't be liable for fraudulent charges, but I'd still like to be a good citizen and to try to limit damages to merchants. – jamesdlin Jan 22 at 22:26
  • @jamesdlin Ok, fair enough. – Jay Jan 22 at 22:41

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