According to the regulations of the new Credit Card Act, 2009, students below 21 years of age had to show either income proof, or a co-signer, before signing up for a credit card. Surveys conducted at the University of Houston Law Center, revealed that students were still able to get credit cards. Almost 29% of these students in the under-21 age group, who started school after fall, stated that they had utilized part of the loan amount to show as income to card issuers while applying for a credit card.
Betty Reiss, Spokesperson, Bank of America, has corresponded via e-mail stating that they had always taken a conservative approach and generally did not allow money from the loan proceeds to be shown as income to secure a card. However, the customer service from the Bank of America has a different story to tell. Customers had proof of telephonic conversations with the customer service executives, who indeed had stated that loan proceeds could be used as source of income, while applying for a credit card. However, Reiss called this bit of information inaccurate and apologized for the same.
The online applications do not specify if the student loans were counted as income and there is not a hint of making any verification on the reported incomes of these students. There are two boxes where the student will have to put information in the box which carries ‘your income’ and ‘other income’. This box requires no explanation as to what the ‘other income’ might mean and one is free to infer what they want.
There’s yet another box for ‘household income’ which states ‘total household income as the sum total of all the income that is within the household, which could be used to repay any financial obligation.’
Can loan be accounted as income?
Different banks have different instructions for applicants. Student under the age of 21, can, according to the application, show income as full-time, part-time wages, allowances, grants, stipends, or even scholarships. However, student loans will not be included as source of income.’