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Why Lying About Your Income on a Credit Card Application Is Not a Good Idea

Hint: Don't do it.

Video Transcript

- When applying for a credit card, lenders ask about your income to determine your credit limit. What's strange is card issuers don't usually require proof of income.

Credit expert John Ulzheimer told Yahoo Finance that they typically take your word for it.

So what happens if you knowingly lie about your income on a credit card application? Well, you're committing a crime called loan application fraud. And it comes with hefty penalties. If caught and convicted, you could face up to $1 million in fines and 30 years of prison.

Banks are required by law to decide how much debt customers take on, and if they can pay it off, which is why they ask about income and check your credit score.

However, lenders typically only dig in deep to verify income for larger loans and mortgages, or if you start to fall behind on payments or max out credit cards after the fact.

While lenders typically only notice large discrepancies, they sometimes use methods like income prediction modeling, or random income increase during the application process. And if they do figure out you lied, Ulzheimer says all they need to do is call the authorities.

So don't do it. Report your actual income.