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Card issuers are legally obligated to ask for your income, as they can only lend you money if they’re confident you can make your payments. You can include several types of income. A higher income will generally help your approval odds and allow for higher credit limits.

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I remember applying for my first credit card. I felt so official filling out all those little boxes and picturing the day my shiny new card would arrive in the mail.

But when the form asked for my annual income, I paused. I was fresh out of college and earning minimum wage. I wasn’t expecting this question, and had no clue whether I’d even qualify.

“What is a good annual 24 hour payday loans Roswell Georgia income for a credit card?” I wondered. “Can I lie about income on a credit card application?” (Side note: I didn’t lie, and I did get the card.)

Fast forward a decade, and I’ve now completed many more credit card applications. Here’s what I wish I’d known when submitting that very first one.

Why Do Credit Cards Ask for Income on Applications?

Credit card issuers aren’t just trying to snoop – the truth is they’re legally obligated to ask for your income, according to the Credit CARD Act of 2009.

While the law doesn’t indicate a specific income requirement, it does state that banks can only lend you money if they’re confident you can make your monthly payments. And to do that, they need to know how much money you’re earning.

Aside from fulfilling their legal duties, your income levels also help credit card companies decide how high your credit limits should be. Because, like the government, they want to ensure you can pay your bills, and part of this means not extending you more credit than is warranted.

Say your annual salary works out to about $5,000 per month. With that amount, a $2,500 credit line seems reasonable – even if you maxed it out, you’d be able to pay it off in full each month. (Which we always recommend to avoid interest and help improve your credit scores!)

But if your take-home salary is $2,000 per month, a $2,500 credit line would probably be way too much. You’d be at greater risk of defaulting on your card than in the first scenario.

Keep in mind that different card issuers have different standards for creditworthiness. American Express might feel comfortable giving you higher credit limits than Chase, for instance (this is just an example; American Express won’t necessarily give you higher limits than Chase).

Insider tip

If your current credit card issuer asks for your income, it may be considering a credit limit increase. While you’re not required to share your income with the issuer of a card you already have, it could be a good thing. The bigger your credit limit, the more available credit you’ll have. If you get a larger limit – and don’t increase your spending – you’ll reduce your credit utilization and could ultimately boost your credit scores. That said, you should only pursue this option if you can resist the temptation to spend more.