If you apply to a credit company, they may require you to provide some proof of income. In other words, they want to know what kind of accessible income you have available.
But what does that really mean?
Well, the law requires these companies to verify how much money you’re making. This way, it protects businesses from taking advantage of customers. It also makes sure you don’t pay more than what you can afford, so it protects you against debt.
What is Accessible Income?
Accessible income represents all the money you can access. The law requires companies to check for it so that you can only apply for credit if you can afford the minimum monthly payments.
However, that also means you can’t qualify for the help you’d otherwise get. And companies can check by themselves what your income is, so there’s no point in misstating the number.
Of course, that doesn’t mean you have to expose all your income streams. Only some of them apply:
- Income of a spouse
- Checking and savings accounts
- Retirement funds and Social Security payments
- Trust funds and gifts
- Student financial aid
- Child support and alimony
- Passive income
As you can see, there’s a lot more going into it than the cash you get from your job. And iIf you’re between 18 and 20 years old, only the following apply:
- Personal income
- Scholarships and grants
- Allowances from parents
You could, of course, borrow money from friends, family, and lenders. But because that’s potential debt, they can’t consider it as your accessible income.
Keep in mind that this number has nothing to do with assessable or taxable income. Companies simply use it to know whether you qualify for their services or not. And we assume you’ve already gone through deductions, taxes, and related.
There are ways to exaggerate your income and qualify for that credit. Not only is it unethical, but you face the risk of owing more money than you can earn. And these limits we set precisely to avoid debt situations.