Show Notes
Rounding up your income or leaving debts off a credit application may help you get approved. But it does not give you more money to repay what you borrow. Learn more about credit and rebuilding your credit score with our free online course after the podcast!
Equifax Canada reported this spring that first-party fraud rose 31% year over year. On credit card applications specifically, it nearly doubled, from 0.08% to 0.15% of applications.
First-party fraud isn't someone stealing your identity. It's a real person deliberately adjusting their own information to get approved: rounding the income up, leaving a payday loan off the form, describing a loan's purpose generously.
Doug Hoyes and Ted Michalos explain what first-party fraud means, how inaccurate income and debt information can affect lending decisions, and why getting approved can make an existing cash flow problem worse. They put the Equifax fraud figures in context and distinguish mismatched information from deliberate deception.
They discuss:
First-party fraud versus identity theft
Why a nearly doubled rate can still represent a small share of applications
Irregular overtime, gig income and the difference between revenue and earnings
Debts that may not appear on a credit report
Why a credit report does not show your current income
How extra credit can provide short-term relief while increasing payment pressure
What may happen if a lender discovers false information
Why debt obtained by false pretences or fraudulent misrepresentation can survive bankruptcy
What to do when you need credit because your income no longer covers your expenses
The key takeaway: use accurate information and assess what you can actually repay. If you feel you need to inflate the numbers to qualify, look at the underlying cash flow problem before taking on more debt. A typo or honest error is not automatically fraud; the circumstances matter.
Related material
How credit bureaus work and what they report
What is an acceptable debt-to-income ratio?
What debts bankruptcy can't discharge
Debt Free in 30 is hosted by Licensed Insolvency Trustees Doug Hoyes and Ted Michalos of Hoyes Michalos.
Learn more at https://www.hoyes.com
#CreditApplications #Debt #Borrowing #DebtFreeIn30
Time Stamps
00:00 Why an inflated income figure can have lasting consequences
00:19 Equifax's first-party fraud figures
01:05 Putting the increase in context
02:13 How income gets overstated
03:21 First-party fraud vs. identity theft
04:30 Mismatched information is not always a deliberate lie
06:38 What can be wrong on a credit application?
07:29 Overtime, tips and gig income
08:44 Debts missing from credit reports
09:20 Should CRA debt appear on credit reports?
11:02 Could one line from your tax return verify income?
12:26 Why lenders ask what a loan is for
13:49 Why small changes to an application can matter
14:13 How automated approval relies on your information
16:13 Getting approved does not mean you can repay
17:44 How debt and payment pressure build
18:45 What happens when the lender finds out?
19:37 Criminal consequences vs. repayment risk
21:12 When a debt may survive bankruptcy
22:16 Examples of fraudulent borrowing
24:12 Tell your trustee about concerns with an application
24:28 How income verification may change
25:35 What to do if you badly need credit
26:39 Address the underlying cash flow problem
27:22 Review your debts and repayment options
Disclaimer: The information provided in the Debt Free in 30 Podcast is for entertainment and informational purposes only and is not intended as personal financial advice. Individual financial situations vary and may require personal guidance from a financial professional. The views expressed in this episode do not necessarily reflect the opinions of Hoyes, Michalos & Associates, or any other affiliated organizations. We do not endorse or
More from Debt Free in 30
If someone asked you right now how much you owe, you'd probably have a number. It's probably low.
If you carry $5,000 on a credit card at around 20% interest, keeping that balance can cost roughly $1,000 a year. Making the minimum payment may keep your account in good standing, but it does not mean you are paying the debt off.
What does it really mean when you max out your credit card?
Why would a lender raise your credit limit when you're already struggling to keep up?
What does it actually take to become a Licensed Insolvency Trustee (LIT) in Canada? Hint: It's not just a quick course and a quick test. In this episode, Doug Hoyes welcomes back Charlie Kovacs to the studio for his first official appearance as a newly minted Licensed Insolvency Trustee! Together, they pull back the curtain on the multi-year journey required to earn the designation. From university requirements and the BIA Insolvency Counselors course to surviving the notorious PC3 assignments, the rigorous two-day CNE case exam, and facing the Office of the Superintendent of Bankruptcy (OSB) oral board examinations—they cover it all.