The sources of income that you can use to meet the “independent ability to pay” test for a young applicant (under age 21) or for a young applicant that is requesting an increase in his/her credit limit is more restrictive than the income you can choose to rely on for a consumer who is age 21 or older. Card issuers can elect to use a more expansive test for applicants age 21 or older that is based on current income, reasonably expected income and income to which the applicant has a reasonable expectation of access.
For the young applicant, you can consider the following sources of income:
◦ Current or expected salaries and wages;
◦ Bonuses and tips;
◦ Retirement benefits;
◦ Public assistance;
◦ Alimony, child support and separate maintenance;
◦ Proceeds of student loans (but only to the extent that the proceeds exceed the amount disbursed or owed to the educational institution for tuition and other expenses);
◦ Income that is deposited on a regular basis into an account on which the applicant is an account holder (either as an individual accountholder or a joint accountholder); or
◦ Joint ownership of income or assets granted under State community property laws.
You can also consider the situation where a non-applicant’s salary or other income is deposited into an account to which the young applicant does not have access, however, the non-applicant regularly transfers a portion of that income to the young applicant’s individual account. In this situation, you may consider the portion of the income that is transferred regularly to the young applicant.On the other hand, it would not be permissible for you to consider a portion of a non-applicant’s salary or other income that is deposited to an account to which the young applicant does not have access, but that is withdrawn by the non-applicant on a regular basis and used to pay the young applicant’s expenses. The CFPB has determined that while this is income to which an applicant age 21 or older could have a reasonable expectation of access, the connection is too tenuous to be considered income that meets the “independent ability to pay” test.
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You may also be interested in our other general Ability to Repay article.