633 – What Happens If You Lie on a Credit Application?

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 guarantee the effectiveness of any specific financial institutions, strategies, or digital tools/apps discussed