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So I received an e-mail today from a bank from whom I have an existing credit card as follows:

To consider you for a future credit line increase, federal regulations require us to have your current income.

Keeping your account info up to date is always a good idea. Plus, it helps us meet federal regulations, which require us to collect updated income info before reviewing your account for future credit line increases. So please take a moment and update your income in about 60 seconds.

As far as I can tell, the email is legit because it includes security information in the e-mail that checks out. Of course, I still am not following any links in that e-mail just in case.

Does anyone here know what the backstory is on this? Was there recent regulation passed where card issuers need to know your income level?

Or maybe I'm wrong and this is just a phishing attempt?

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    I received something to this effect in the past as well, and it was legitimate. I went ahead and signed in (not through the email link, just in case, I went to the site like I normally do) and there was a box for it that was empty. I got an email a few weeks later and my credit limit got a bump up. You never know why-- it could be because they liked my income or they want to encourage people to give them this information. – David Schwartz Sep 5 '14 at 4:50
  • Could it be a way for the IRS to cross-check what people are reporting their incomes to be? I got the same email and that's what it made me think it could be. – user20149 Sep 6 '14 at 16:48
  • I've updated my answer with a new development! – dg99 Jan 17 '15 at 19:27
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I received exactly the same letter (in email form) from Discover Card about 9 months ago, so I immediately called them, thinking that someone was doing some very convincing phishing -- the email had zero suspicious headers, the mail relays looked right, the stylesheets looked exactly like Discover Card's, etc.

Once I got a knowledgeable rep on the phone, she said Discover Card did indeed send the email. She explained that the sentence means "federal regulations allow us to grant you a credit increase (without performing a credit check) based solely on your statement of your income", and therefore they're happy to store your stated income within your account profile in case they ever want to adjust your credit line in the future.

Now, this of course seems ridiculous to me, because creditors have always had complete freedom to adjust your credit line up or down as much or as little as they want without doing credit pulls. (I know this from first-hand experience when Citibank cut my credit line by 85% without doing a credit pull.)

I think what must have happened is that some federal law was passed (or maybe expired) last year such that now card issuers are allowed to ask/store/use their customers' income information, so they figure "hey, let's try to get as many customers as possible to volunteer this information, first by sending a letter that kinda makes it sound like they have to tell us, and then by telling them it can possibly benefit them in the future".


UPDATE

Three months after I posted this answer (i.e. during the holiday shopping season), there was an interesting new development in my case that I think might be relevant. Out of the blue Discover sent me a letter saying I might qualify for a credit line increase. All I had to do was go to a page on the Discover site and answer two questions: 1) my yearly income, 2) my monthly housing expense.

So I went to the page and filled in the same number for (1) that I gave to the phone rep many months earlier -- a number, it should be said, that Discover has no way of verifying. When I was done, the site instantly reported that I was eligible for up to a 20% credit line increase. I was taken to a page with a slider bar where I could select the exact amount of the increase that I wanted. I picked the maximum (I'm not sure why anyone wouldn't), and it was instantly approved. There was no accompanying change in terms, APR, anything.

Two points:

(a) I have only a "good" credit score (not nearly an "excellent" score), so I have not been offered a credit line increase by anyone in quite a long time. (On the other hand, I have been a Discover cardmember for ~20 years and have never missed a payment or carried a balance with them. Additionally, I rarely "double" my cashback with them; I usually just take the credit against my balance.)

(b) I have had my credit reports "frozen" for almost four years to help prevent identity theft, so Discover could not have pulled my credit before making this offer. (Naturally they have their own internal data on me and can generate their own internal quasi-FICO scores.)

So ... the moral of the story would appear to be that by my responding to their initial inquiry a year ago and giving a number (which, again, they had no way of verifying) for my annual income, I was eventually given a substantial credit line increase (around the time of year when Discover probably thought I would make use of it) despite my merely average credit score.

YMMV!

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    So they switched the word "allow" with "require" and sent it with the intent of misinforming their customers. Sounds like a great lawsuit in the wings. – user2813274 Sep 5 '14 at 1:55
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    Are you certain about your third paragraph? I don't know much about this, but if your credit card is issued by a government insured or regulated bank, it's quite plausible that government regulations would restrict how they could extend credit (in order to control the bank's risk). Raising a credit limit exposes the bank to additional risk, so a regulator might well require they do the due diligence of an income check. Cutting a limit reduces the risk to the bank, so a regulator might not care when they do that. – Nate Eldredge Sep 5 '14 at 21:00
  • @NateEldredge That's a good point. I was thinking more about a creditor's right to restrict credit than about their right to grant credit. The former is a case of creditor vs. debtor, while the latter is a case of creditor vs. underwriter/shareholders (and what the creditor has to reveal to them). On the other hand, doesn't it seem like any voluntary credit increases a creditor gives out as a result of this data mining operation will be so tiny as to not even appear within the significant digits on their risk sheet? ( Certainly the $0 increase Discover gave me didn't affect their risk. :) – dg99 Sep 5 '14 at 21:25
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    @dg99 Sure, the amount of credit they give to ONE customer is a negligible risk to the credit card company. But surely you don't suppose that they picked you out of all their millions of customers to send this email to and maybe give credit increases. They surely sent these to millions of people. And if they increased a million customers credit by a few hundred or thousand dollars each, that's a lot of money even to Discover. – Jay Sep 8 '14 at 4:59
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    Credit card companies don't have complete freedom to adjust your credit limit. There are all sorts of government regulations on the credit industry. – Jay Sep 8 '14 at 5:00
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I recommend you take a look at the Card Act of 2009's amended "ability to pay" regulations: http://files.consumerfinance.gov/f/201304_cfpb_credit-card-ability-to-pay-final-rule.pdf

There's a lot of literature here, mostly discussing the recent changes to the rules. The highlights are: "Ability to Pay" rules differ based on whether or not the consumer is age 21 or older (these rules have gotten more strict since the original law). There also is allowance for a consumer to consider outside income to which they have a "reasonable expectation of access" to count toward their own ability to pay.

But I direct you to this paragraph near the end of page 5:

On March 18, 2011, the Board issued a final rule (March 2011 Final Rule) amending § 226.51(a) to apply the independent ability-to-pay requirement to all consumers, regardless of age.

The Board adopted this change, in part, in response to concerns regarding card issuers prompting applicants to provide “household income” on credit card applications. To address this specific concern, in addition to adopting an independent ability-to-pay requirement for consumers who are age 21 and older, the Board clarified in amended comment 51(a)(1)-4.iii that consideration of information regarding a consumer’s household income does not by itself satisfy the requirement in § 226.51(a) to consider the consumer’s independent ability to pay. The Board stated that in its view it would be inconsistent with the language and intent of TILA section 150 to permit card issuers to establish a consumer’s ability to pay based on the income or assets of individuals who are not responsible for making payments on the account The Board’s amendments to § 226.51 became effective on October 1, 2011.

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    Great answer with an original source citation. Thank you! – SimplGy Sep 5 '14 at 16:26
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    Unfortunately, the quoted portion of the citation isn't actually germane. That's referring to the old information that the cited document is replacing with a new rule (which may actually be the reason for the question!). – Joe Sep 6 '14 at 5:04
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    I'm guessing the relevant part of 1026.51 is "A card issuer must not open a credit card account for a consumer under an open-end (not home-secured) consumer credit plan, or increase any credit limit applicable to such account, unless the card issuer considers the consumer's independent ability to make the required minimum periodic payments under the terms of the account based on the consumer's income or assets and current obligations," plus the next section: "It would be unreasonable for a card issuer to not review any information about a consumer's income, assets, or current obligations". – Joe Sep 6 '14 at 5:41
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I also received the same request in an email. I called Discover and they told me that they were required to send that out. I am assuming that they are required to send it out in order to adjust our line of credit, but they would not confirm that. They also said that it was optional for us to respond to that request. In other words, we don't have to update our income if we don't want to.

protected by Community Oct 14 '14 at 18:14

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