Can I Use My Parents’ Income for a Credit Card?
Understand how income is assessed for credit card eligibility, including family resources. Learn pathways to establish and grow your credit responsibly.
Credit card applications require individuals to provide income information. This financial detail helps card issuers assess an applicant’s ability to repay borrowed funds, an important factor in approval and credit limits. Understanding eligible income is important for anyone seeking a credit card.
Defining Income for Credit Card Applications
Credit card issuers consider various financial resources as income when evaluating an application. Traditional sources like wages, salaries, self-employment earnings, and business profits are commonly included. Non-traditional sources also qualify, including Social Security benefits, disability payments, retirement distributions, and investment income such as dividends and interest.
Other forms of regular financial support, such as alimony and child support, if consistently received, can also be factored into an applicant’s total income. Scholarships, grants, and regular allowances from a parent or family member may be considered. All reported income must be verifiable, consistent, and the applicant must have a reasonable expectation of access to, or direct control over, these funds.
Applying with Household Income
The ability to include household income on a credit card application is governed by the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009. This law mandates that credit card issuers assess an applicant’s ability to repay. The CARD Act clarified that applicants aged 21 or older can include “any income or assets to which the applicant has a reasonable expectation of access.”
For individuals under the age of 21, the rules are more restrictive. They can only report their independent income, which includes personal earnings from employment, scholarships, grants, and regular allowances they directly receive. The income of parents or other household members cannot be included for applicants under 21.
For applicants aged 21 or older, the “reasonable expectation of access” provision allows for the inclusion of shared household income. If an adult lives with parents or other household members and regularly uses their income to pay for common household expenses, they may include that portion of the household income. This applies if the income is deposited into a joint account or if the applicant receives regular transfers or has direct access to funds for their expenses. This rule is relevant for stay-at-home spouses or partners, allowing them to qualify for a credit card without individual earned income, provided they have reasonable access to their partner’s income.
Other Ways to Build Credit
If direct use of parental income on a credit card application is not feasible or desired, several alternative strategies exist for building credit.
Becoming an authorized user on an existing credit card account is one method. An individual receives a card linked to the primary account holder’s account, allowing them to make purchases. While the authorized user can use the card, the primary cardholder remains legally responsible for all debts incurred. This arrangement helps the authorized user build a credit history, as positive payment activity on the account is reported to credit bureaus.
Secured credit cards offer another way to establish or rebuild credit. These cards require a cash deposit, which serves as collateral for the card issuer. The deposit minimizes risk for the issuer, making these cards more accessible for individuals with limited or no credit history. By making on-time payments and using the card responsibly, individuals can demonstrate creditworthiness, and many secured cards can eventually transition to unsecured accounts.
Student credit cards are designed for college students, often with more lenient income requirements than traditional cards. These cards aim to help students begin building a credit history while managing smaller credit limits. Some student cards may require proof of independent income or, for those under 21, a co-signer. A co-signer legally agrees to be responsible for the debt if the primary cardholder fails to make payments.