As you are well aware, the big three credit bureaus (Equifax, Experian and TransUnion) already collect and report information about your payment history and accounts in collections to prospective lenders, employers and others. What you don’t know is that starting next month, the will start “guesstimating” your income as well.

New requirements that take effect with the Credit Card Act make credit-card companies responsible for taking into consideration your income (as well as assets and outstanding debt) before approving credit. However, banks are allowed to use statistical models to estimate information that is not provided directly. So to help banks comply with these new regs (and get more fee income themselves) the credit reporting agencies are launching their own income estimation services.

These estimates are based on credit records and can make or break your ability to get a new loan or line of credit.

Experian is touting its new Income Insight service in press releases and on its website.  According to Experian:

Income Insight is the first income estimation model that can be delivered in a tri-bureau fashion based on credit reports from any of the three largest credit reporting companies. The output of the model is a specific dollar value rather than a range, which would limit usefulness. Income Insight is available online and in batch and can be used in account acquisitions, account review and collections.

Unlike Experian, TransUnion offers an income range.

This is all nice PR, but common sense would lead you to recognize that no one outside of the I.R.S. knows your true income. And please, make sure that the Internal Revenue Service does. You don’t want problems with the tax man and more and more lenders are asking for tax returns to show proof of income.

Clearly the bottom line is that for every step the Feds take to make lending more consumer-friendly and transparent, the more their rules give credit card companies the wiggle-room to deny credit. You may be able to fight a credit decision based on estimated credit, but it’s probably not worth your while.