Jan
1) Does the current balance in the applicant's bank account affect the credit line that he will be approved for? If yes, would it be advantageous for the applicant to get extra (temporary) funds deposited to the account before applying (to increase the chance of a higher credit line)- or would this complicate things for any reason?
2) Does the applicant's current income affect the credit line that he will be approved for? If yes, is one allowed to identify a higher income amount on the application?
Please answer only if you know what you're talking about! Thanks
Answer:
1) Since YOU are applying for a business card as you stated, they rarely look at assets like bank accounts. That's because assets in a bank account are harder for them to get at if they have to sue someone. They also know that the bank account can just be emptied the next day. They know this game better than you or me. They are always smarter than us and this is why. In every card agreement, there is a rule that states that they can change the rules whenever they want.
2) Besides your personal credit history(it's always your social security number on the form whether it's business or personal), income is the biggest factor. Income is the one thing that they CAN get at easily if they have to sue someone. It's all about them making sure that they can win. They have to assess risk on their end. Their formula determines if you are high risk or low risk for them. Claiming higher income on an application does violate trade laws. You run a huge risk. It's really not worth it.
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Answer:
For a 'business card' none of these factors would be taken into account. A business card would be approved for the company based on their relationship with the bank. Any balances would be cleared by the company each month in full.
If you are applying for a personal card that would be used for business purposes and the company would pay you any money spent on the card in the line of business then the answers are as follows.
1 (based on uk lending) bank balance does not affect the intial amount as it is not accessed wen credit scoring - if you have a relationship with the bank then yes it does affect the amount if you call them after the score has been assessed.
Extra fund would have no impact on the amount. Unless funds have been in place for over 6 months it is assumed they can leave the account as quickly as they entered them.
2 The current income does affect the limit. You cannot say you have a higher income than you do - if you do this and are caught your file would probably have a flag placed on it as potental fraud taking place that can impact credit searches and mean that you struffle to obtain credit as easily as you have in the past.
Assuming the card is in a company name the bank usually have a relationship with the business and assign limits as requested by the business depending on size of card limit required and relationship with the 2 organisations.
Answer:
Part #1: The current balance in the applicant's bank account will have almost no affect on whether they are approved or not.
When you are getting a credit LINE, instead of a credit CARD, your bank deposits and balance will play a more important role.
I would not recommend temporarily depositing funds to boost your balance. If you did do this, it would not complicate things.
Part #2: The applicants current income WILL affect the credit line that he is approved for? Most banks are very flexible with what they will consider acceptable income. I have personally sat in front of loan officers at Wells Fargo, Bank of America, and Washington Mutual who said it was OK to list projected income. There are bank loan officers who will tell you to put down household income (even though it is a business loan application). Indeed, I have seen the words "household income" listed on a business application. Almost all of these products are stated income. In other words, no documentation of the income is asked for.
I have always found that it is best to play things honest and straight, and I have also found that the banks are so loose with their business credit underwriting guidelines that getting approved is fairly easy.
To ensure that you are being ethical, simply GO IN to the major banks to apply for business credit. ASK them if you can list household income (if you have a decent household income) Remember household income covers ALL of the gross revenue of everyone in the household. If you don't have a decent household income, then ask if listing your PROJECTED income is acceptable. Only apply with the ones that say yes. List a decent projected income.
As the people at the bank will tell you, these products are mainly FICO score driven. Although they won't approve you if you list an annual income of $10,000 - they are really not doing even the most basic things that could be done to nail down real numbers. For instance, there is a form called a 4506 that some banks request. When you sign this form, it can be faxed in and the same day, or next day, they will get a transcript of your tax returns for the last three years. This is a simple and easy procedure that banks who want to verify actual numbers put in place because it is not paperwork or time intensive. If you have a good FICO score, they WANT to lend you money and they don't want to make it hard. They do make you write a number down in the income area.
A great website resource for obtaining business credit is: http://www.access-business-credit.com
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