Why they’re asking: Lenders use updated income to reassess risk. If you don’t respond, they may assume your finances worsened and cut your credit limit.
Ignoring it can hurt: Skipping the request may lead to lower limits or closed accounts, which can ding your score by raising utilization or shortening credit history.
Updating can help: If your income is steady or higher, sharing it could mean bigger limits and better offers — just verify the request and be honest.
A recently updated article at Clark.com highlights a growing trend of banks and credit card companies increasingly asking customers to update their income information.
While it might feel intrusive and your first instinct might be to ignore it, there are actually some practical reasons lenders are doing this. And more importantly, how you respond can affect your credit limits, your credit score, and even your future borrowing power.
With that said, here’s the smartest way to respond to these requests.
Why lenders are asking now
Clark Howard makes the point that with job changes, layoffs, and inflation still affecting household budgets, lenders are trying to reassess how risky of a borrower you are.
Credit card companies, in particular, want to know whether your current income still supports the credit limits they’ve extended to you.
In other words, if they don’t have updated information, they very well could assume the worst.
So…should you respond?
First of all, you are not legally required to update your income when asked.
But according to Howard, it’s important to understand that ignoring it can have consequences.
If your income has stayed the same or increased, updating is usually a smart move. This will reassure the lender that you can still handle your available credit and lowers the chance they’ll cut your limit or close your account.
If your income has dropped, it’s more complicated. Sharing a lower number could trigger a credit line reduction at a time when you might need the flexibility.
In that case, you may choose to skip a voluntary update. But keep in mind that the lender could eventually require you to update your information to keep your account open.
What can happen if you don’t update
Lenders will sometimes take action when they feel they’re being left in the dark.
This can include doing the following:
- Lower credit limits – This reduces your spending power and can raise your credit utilization ratio, which may hurt your credit score.
- Account closures – Losing an older account can shorten your credit history and negatively affect your score.
- Strained lender relationship – A closed or restricted account could make it harder to get a loan or new card from that bank later.
The potential upside of updating
But if your income has improved, Howard points out that there can be some great benefits:
- Higher credit limits – A larger limit (if you don’t overspend) can help your credit score by lowering your utilization percentage.
- Better card offers – You may qualify for cards or perks aimed at higher-income customers.
The smart steps to take
If you haven’t received an income update request recently, it’s simply a matter of time before you do.
When you do get it, here’s how to handle it safely:
- Confirm it’s legitimate. Log in directly through your bank’s official website or app instead of clicking email links.
- Be honest. Providing false income information on a credit account can be considered fraud.
- Include all eligible income. That can mean salary, self-employment income, retirement income, Social Security, and investment distributions.
- Keep debt in check. High balances make lenders more nervous. Paying down credit card balances can reduce the odds of a limit cut.
- Monitor your credit reports. If a lender lowers a limit or closes an account, you’ll want to track how it affects your credit profile and score.