personal informationCredit cards are definitely a useful financial tool, providing strong security features and valuable rewards, but there’s no denying that applying for one requires sending quite a bit of your personal information. Credit card issuers want to know a lot about you, from the date you were born to how long you’ve lived at the same address, and it’s not always clear why. To assure you that you’re not giving out your personal information for nothing, we’ve gone through the credit card application process and detailed three primary reasons why card providers need the data they ask for, as well as whether those providers will sell your information once you’re a customer. Read on to learn a bit more about all the ways your personal details fit into the credit card approval process.

To make sure you’re creditworthy

When you apply for a credit card, the credit issuer has to determine whether it should approve your application and how large of a credit line it should grant you. Issuers need a few pieces of information to make that decision, the first and foremost being your social security number. Credit card providers take your social security number to the three major credit bureaus (Equifax, Experian and TransUnion) in order to pull your credit reports, which contain detailed information regarding your credit history, and your credit scores, which are numbers that sum up how likely you are to repay your debt on time. They use this information on how you have used credit in the past to make an educated guess at how you will use their card if they approve you.

In addition to your social security number, issuers will also ask you to provide some information regarding your income, employment status, housing situation and your monthly housing payment in order to get a better idea of how much credit you can handle and what your monthly financial commitments are. Having a full-time job, high income and a low housing payment relative to that income can indicate that you’re financially stable and that it’s probably safe to extend a high credit limit to you. Note that this personal information is entirely self-reported, and that credit card issuers don’t typically investigate the income and employment status you put down. However, just because issuers usually don’t verify the information you provide doesn’t mean you should feel safe to lie about it. Lying about any of these details can constitute loan application fraud, which is a serious crime.

To verify your identity

Identity thieves aren’t just the bane of consumers; they’re also hazardous to credit card issuers. An identity thief who steals someone’s personal information and opens a credit account in their name can rack up huge amounts of debt and then disappear, leaving the card issuer legally liable for the fraudulent charges. To prevent this, credit card issuers can use contact information that they would want to collect anyway to verify that it’s really you applying for the card. Your credit reports list your name, address and sometimes your phone number, so issuers can easily cross-reference this information with an application to make sure everything is accurate and up to date. An old address or a slightly misspelled name may indicate a credit application is from an identity thief using stolen personal details.

To comply with federal law

Financial institutions generally have to deal with more regulations than other businesses, including stipulations set by the 2001 Patriot Act to help fight money laundering. According to the Patriot Act, every financial institution is required to have “know your customer,” or KYC, procedures in their application processes, and to keep records of the information they use to identify their customers. The weird thing about KYC requirements, though, is that the Patriot Act didn’t set any particular standards in place for what information financial institutions should gather, so credit card issuers have to determine their own KYC procedures and hope they do enough to not violate the law. Many credit card issuers just collect the same information they would need for other purposes anyway, for example your name and social security number, though a few issuers such as Bank of America, Capital One and Citi (a NextAdvisor advertiser) go beyond that and ask questions pertaining to citizenship.

Additionally, credit card issuers have to ask your date of birth because applying for a credit card under the age of 21 requires a cosigner or proof of income according to the 2009 Credit CARD Act, and most issuers won’t approve cards for any applicants under 18.

Do credit card issuers sell your personal information?

Now, we’ve established that card providers legitimately need your personal information to evaluate you as a cardholder, but can they just turn around and sell that information to other companies? In short, yes, but maybe not in the way that you assume. Many financial institutions have a privacy policy that lets them share your personal information with other companies so those companies can more effectively advertise to you. For instance, Mastercard collects anonymous customer purchase data, bundles it according to ZIP code and then sells it to advertisers, which helps the advertisers learn the geographic areas in which they should focus their efforts. Mastercard also recently partnered with Google to give the tech giant more insight into how people spend money at retail stores. Your personal information and purchasing habits may very well be a part of some data set that your card provider is sharing with marketers, but you don’t have to worry about your issuer selling your social security number to some random corporation.

Now that you know why credit card issuers ask for the information they do, credit card applications won’t seem quite as intimidating. If you’re looking for a new card, a good place to start is our credit card reviews.