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 andrebuildingyour credit score with our free online courseafter 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 fraudisn'tsomeone stealing your identity.It'sa real persondeliberatelyadjusting 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
Whyanearly doubledrate canstillrepresenta small share of applications
Irregular overtime, gig income and the difference between revenue and earnings
Debts that may not appear on a credit report
Whya credit report doesnot 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 falsepretencesor fraudulent misrepresentation can survive bankruptcy
What to do when you need credit because your income no longer covers your expenses
The key takeaway: useaccurateinformation and assess what you canactually 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.
00:00 Whyan inflated income figure canhave 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 ona credit application?
07:29 Overtime,tipsand gig income
08:44 Debts missing from credit reports
09:20 Should CRA debt appear on credit reports?
11:02Could one line from your tax return verify income?
12:26 Why lenders ask what a loan is for
13:49 Whysmall changesto 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 youbadly needcredit
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 guarantee the effectiveness of any specific financial institutions, strategies, or digital tools/apps discussed
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