If you intend to apply for a visa for international travel, studying abroad, or simply to borrow from a bank, you need to prove your income. So what is income verification? How do you prove your income? In this article, TOPGOVN will guide you through the simplest ways to prove your income!
What is income verification? Income verification is the process of demonstrating a stable monthly, quarterly, or yearly income based on documents recognized by authoritative bodies such as banks, visa-issuing agencies, etc. This procedure lets others know that you have a stable monthly income.
For example, income verification can be a payslip or a salary statement.
What is the English term for income verification? Income verification in English is called “Financial Proofing.” This term is widely used in the financial sector. There are also other terms to describe the process of proving financial capability, such as “Demonstrate Financial Capacity” or “Demonstrate Financial Capability.”
Why do you need to prove your income? Why is income verification necessary? Many people have this question. Let me give a simple example. You apply for a 100 million VND loan from a bank. But if you only have your ID card and household registration without any documents to prove your income, indicating your ability to repay the loan, will the bank process your loan application? This is why you need to prove your income when borrowing from a bank. Most banks require this to reduce the rate of bad debt when lending.
What is the significance of income verification? Similarly, it applies to visa applications. Many Vietnamese people travel abroad and do not return. Therefore, when applying for a visa for study or travel, embassies will require financial proof to ensure the visa’s purpose is genuine and to minimize credit risk for the person traveling abroad.
Why do you need to prove your income? There are many areas where you need to verify your income to complete the documentation, most commonly for bank loans and visa applications for study or travel.
Income verification to get a credit card Besides some methods to open a credit card without income verification, usually, you must prove your income to open a credit card. In addition to salary income, some banks also support customers opening credit cards with other income verification methods such as:
- Salary from your job
- Income from freelance work
- Income from your spouse
- Pension
- Money from investment funds
- Allowances and insurance
Income verification for bank loans To borrow from a bank, customers must prove their income so the bank can assess their repayment ability.
How to prove monthly income for bank loans Proving income through payslips This method applies to employees of companies or organizations receiving salary via bank transfer or cash. It is the most common method, preferred by banks like Vietcombank, ACB, VPBank, etc. A set of documents for income verification through payslips includes:
- Employment contract, appointment letter, or work confirmation
- Salary statement, salary confirmation, or payslip for the last 3-6 months (depending on the bank).
Proving income through dividends, stocks This method is advisable if you hold shares or dividends from a company actively trading on the stock market and the company is performing well. Banks only accept shares from reputable companies with profits in the two consecutive years before the loan application. Documents include:
- The company’s financial reports for the last two years to show growth.
- Documents confirming capital contribution and dividend payment ratio.
- Dividend payments are usually made through banks, so bank statements can increase the likelihood of loan approval.
Proving income from rental properties This method involves proving income from rental properties, shops, or workshops. The bank’s appraisal department will visit the site for verification. Documents include:
- Ownership documents for the rental property, shop, or workshop.
- Rental contracts with tenants.
- For room rentals, additional temporary residence or KT3 documents of the tenants are required.
Proving income from company profits This method is for business owners, provided the business is profitable. Proving income for bank loans from a personal company is convenient if the company is consistently profitable. Documents include:
- Business registration certificate with your name as the owner.
- Tax receipts.
- Company’s charter.
- Financial reports.
- Additional bank statements from the company’s account.
Other income verification methods include proving income through savings accounts, authorized assets, etc.
Income from savings accounts Savings account funds, including both principal and interest, are considered a source of income. To verify this income, you need a notarized copy of the savings book and the original for verification. If the savings are used to repay a loan, the bank usually requires the amount to be frozen. For visa applications, freezing the amount is unnecessary.
Principles of recognizing income sources Income must be documented specifically as follows:
| Income Source | Proof Documents |
|---|---|
| Salary | Bank account statements or salary confirmations |
| Rental income | Receipts or bank statements and rental contracts |
| Vehicle rental income | Receipts or bank statements and rental contracts |
| Business income | Input-output records, business expenses, sales invoices |
| Dividend income | Dividend distribution minutes from shareholders’ or members’ meetings |
| Income from valuable papers | Interest receipts and photocopies of the valuable papers |
| Other irregular income | Teaching: student records, tuition receipts; Clinics: clinic income and expense records; Consultancy offices: income and expense records, etc. |
Latest income verification form Here, I provide the latest salary confirmation form as per legal regulations for those receiving cash salary from their company. Just download, fill in the information, and have HR stamp it. The salary confirmation form is widely used by many banks.
Can you borrow from a bank without income verification? Most banks require income verification for loan applications since it is an unsecured loan. However, some financial institutions support loans without income verification. You can refer to fast online loan websites.
Guidelines and notes for preparing income verification documents
- Do not falsify income documents: The income assessment will be based not only on the documents you submit but also on actual verification. If any forgery is detected, the application will be immediately rejected, and you might be charged with document forgery or fraud.
- Submit all necessary income documents: The more complete your documents, the better the lender can assess your income. The higher your proven income, the higher your chances of getting a loan.
Conclusion
After reading this article, you should understand what income verification is and its importance. Hopefully, this article is helpful for you when you need to prepare income verification documents for a bank loan.]
