Before regulatory reform in 2010, it was not unheard of for a person to get a credit card without any income. As of the date of publication, most credit card accounts require the lender to verify income. However, some credit card companies use a loophole that allows loose borrowing requirements. Even if you can get a credit card with little income, doing so is not in your best interest.
Technically, there is no minimum yearly income to qualify for a credit card in the lending industry. The Credit Card Act of 2010 only requires lenders to verify that the borrower can afford to pay for the limit on the card and it is up to the lender to decide how much the borrower can afford. Thus a person making a few thousand dollars might qualify for a card limit of up to $500 if the lender determines the borrower can pay for it.
Consumers who want any type of card to start building their credit history usually look to cards with the lowest standards, which is typically limited to secured cards and department store accounts. Department store cards that use a major payment network, such as Visa, MasterCard and Discover, generally require at least $12,000 to $14,000 in yearly income. Creditors only issue secured accounts when the borrower puts down a deposit on the line, so the minimum income is probably far less.
How Income Verification Works
After the passage of the CARD Act, lenders worried how they would approve borrowers, especially at department stores, because most people do not walk in with a pay stub or a W-2 as the act initially required. Final regulations on the bill in 2010 state that creditors can estimate income, which probably occurs with data from the borrower's credit report. In this case, your actual minimum might not matter as much as the creditor's estimation of your income.
Student credit cards could be another option, because lenders know students tend to have the lowest amount of income. Discover, for instance, requires only $2,000 in verified income annual to qualify for a student account. However, people under 21 can also use a cosigner. A cosigner needs about $15,000 in income as of 2011. Both account holders must have a low monthly debt-to-income ratio. Lenders like a DTI less than 36 percent, otherwise the borrower probably cannot afford more debt.
In 2010, the "Wall Street Journal" reported a dramatic rise in "professional" credit card offers, probably because the CARD Act does not apply to these accounts. The minimum income to qualify for this type of account might be none at all, only that you own a small business.
No matter what card you go for, try to give a lender as close an estimate to your actual income as possible. You do not want a credit card with a higher limit than you should have, because if you max it out, you might not be able to afford to pay it back. This could destroy your credit and could eventually lead to a bankruptcy.
- ABC News; Credit Card Borrowing Tightens for Under-21s; Susan James; 2009
- Wallet Pop; Lenders Plan to Guess Your Income from Credit Report; Lita Epstein; 2010
- BCS Alliance: How to Get a Credit Card
- First Data: Profitable Strategies for Increasing Private-Label Card Income
- "Wall Street Journal"; Beware That New Credit-Card Offer; Jessica Silver-Greenberg; 2010