When applying for a credit card, most issuers will inquire about your employment status and total gross annual income. Having a stable source of income is important, but it is still possible to get approved for a credit card even if you are currently unemployed or have a non-traditional employment status.
Your income level is a significant factor in determining your creditworthiness and credit limit. However, credit card issuers also consider other aspects, such as your credit history, credit score, and existing financial commitments. So, if you have a solid credit history and a good credit score, it can positively influence your credit card application’s approval chances.
Can you apply for a credit card while unemployed?
Applying for a credit card is not limited to just full-time or part-time employees. Whether you are unemployed, retired, or a stay-at-home parent, you still have the option to apply for a credit card.
The CARD Act of 2009 imposes certain obligations on credit card issuers to assess an individual’s ability to handle the minimum payments associated with a credit card before granting a new card or increasing credit limits. This involves examining your annual income, as well as your monthly rent or mortgage payments, and reviewing your credit report to evaluate your existing credit card and loan commitments.
Qualifying for a new credit card may be more challenging if you don’t have any income. However, it’s essential to note that income doesn’t necessarily have to come from traditional employment sources.
Regardless of your employment status, you can still explore your options and apply for a credit card to meet your financial needs and goals. By understanding the card issuer’s requirements and demonstrating responsible financial behavior, you can increase your chances of obtaining a credit card even without a traditional job.
What qualifies as income and how to list it
Calculating your income for a credit card application involves considering various sources of earnings. Instead of listing each income separately, combine all the amounts you wish to include and determine your annual gross income, which is your pre-tax earnings.
Certain income, like non-taxable insurance payments, might need separate listing or require the issuer to adjust the amount before adding it to your gross income.
When tallying your income, account for money earned through employment, your own business, freelance work, or gig jobs. Additionally, include regular income from investments, savings, retirement accounts, and various types of public assistance.
Other sources of income that may qualify are alimony, child support, financial aid, royalties, foster-care income, and proceeds from trusts.
In some cases, credit card issuers might allow you to include assets and income to which you have a reasonable expectation of access, such as your partner’s earnings if you share finances.
However, if you are under 21 years old, you must have an independent source of income to be eligible for a credit card. This could include a regular allowance from a family member, but not your spouse or partner’s income unless it’s in a joint account that you co-own.
Other options if your income isn’t enough
Trouble Qualifying for Credit Card:
If your income is not sufficient, qualifying for a credit card, especially a premium one, can be challenging. Premium cards often come with high minimum credit limits, which require a higher income to manage the potential minimum payments.
Consider Cards with Low Credit Limits:
Instead of pursuing premium cards, opt for credit cards with lower credit limits. Many cards designed for building credit come with lower limits. Some may require a refundable security deposit or an annual fee, but not all of them do.
Joint Credit Card or Authorized User:
An alternative approach is to apply for a joint credit card with someone who has a steady income. Keep in mind that not all card issuers offer joint cards. Alternatively, you can become an authorized user on someone else’s credit card, but remember that the primary account holder retains full control and liability for the balance.
Using Assets to Qualify:
If you possess substantial savings or investments, you might explore qualifying for a credit card based on your assets. However, it’s essential to inquire with the card issuer about this option since many credit card applications do not have a specific section to disclose your assets. Applying for a card from the same bank or credit union where you hold your savings might improve your chances.
Remember to always assess your financial situation carefully and choose a credit card that suits your needs and ability to manage payments responsibly.
The importance of building credit
Credit card issuers evaluate more than just your income when you apply for a card. They also consider your credit history and credit score. Having a good credit standing can lead to various benefits, such as qualifying for new cards, receiving lower interest rates, and obtaining higher credit limits.
Beyond credit cards, a strong credit history plays a significant role in other financial aspects of life. When applying for loans, a positive credit history improves your chances of approval and may lead to better terms. Insurance companies often factor in your credit history, affecting your premiums and coverage options. Even some employers, particularly in legal or financial industries, may assess your credit history before offering you a job.
If you do decide to get a credit card, responsible usage is essential for building good credit. Timely payments and using only a small portion of your credit limit are crucial factors in maintaining a high credit score. Remember, carrying a balance is unnecessary; paying your bill in full each month helps build credit without incurring interest on your purchases.
How much income do I need to get a credit card?
Credit card eligibility is not tied to a specific income threshold. Instead, card issuers evaluate your ability to manage minimum payments based on factors like the credit limit of the card and your existing monthly obligations, including rent and loan payments.
When applying for a credit card, the issuer will assess your financial situation to determine if you can handle the card’s minimum payments responsibly. This evaluation involves considering your credit limit and existing monthly financial commitments, such as rent and loans.
The amount of income required to qualify for a credit card varies depending on the card’s credit limit and your current financial responsibilities. Rather than a fixed income threshold, card issuers focus on ensuring you can manage the minimum payments effectively.
