When you apply for a credit card, credit card companies consider your income as a major factor to determine your ability to make monthly payments on time in addition to the amount to establish as your initial credit limit. Your income also helps to determine whether you are in a position to use the credit card to establish good credit.
Credit Card Programs
Credit card companies offer different types of credit card programs, such as co-branded credit cards and home equity credit cards that consider different income-eligibility requirements. Subprime credit cards are often issued to individuals with minimal credit history, low income or low credit scores. The subprime credit cards typically have lower credit limits and higher interest rates as compared with other programs. For each credit card program, there are minimum requirements that must be met before you are approved. Each lending institution establishes its own credit card underwriting standards, including the minimum-income requirements for each credit card program.
Minimum Income Levels
For subprime credit card programs and other programs that allow individuals with low income to establish credit, credit card companies generally consider annual income ranges of individuals that are $10,000 or higher. The underwriter will evaluate the income in addition to your monthly debt and credit history.
Income Verification Process
Along with the credit card application, you must submit proof of your income. This includes your current paycheck stubs, bank statements or W2 statements. Most credit card companies consider various forms of income in addition to employment income. Employee bonuses, tips, self-employed income, child support, alimony, real estate investment income and other forms of steady income can be combined to tally your total income. You must also report whether you own checking or savings accounts. Many credit card issuers consider investment accounts and other assets to determine your ability to keep the credit card in good standing.
During the underwriting process, the credit card company will evaluate the stability of your income over a period of time. Your income should be consistent over a period of one to two years. If you are employed, the consistency of your employment is also a qualifying factor that credit card companies use to determine your eligibility for a credit card. For example, if you have been employed by the same employer for two years, it demonstrates employment stability.
Marie Huntington has been a legal and business writer since 2002 with articles appearing on various websites. She also provides travel-related content online and holds a Juris Doctor from Thomas Cooley Law School.