Ever since the Credit CARD Act went into effect, people who rely on a spouse or partner’s income have been prevented from getting credit cards – something that the Consumer Financial Protection Bureau (CFPB) would like to change.
We once asked whether Ann Romney, stay-home-spouse to Republican presidential candidate Mitt Romney, would be able to get a credit card under the current Federal Reserve regulations, which require credit card issuers to verify the income of all applicants. The rule, which was meant to prevent college students from getting approved for lines of credit they had no way to repay, meant that parents who stay home with their children, or anyone who doesn’t have a steady income and relies on a partner’s paycheck, had to have a co-signer in order to be approved for a credit card.
Now if Richard Cordray, director of the CFPB, has his way, Ann Romney and her fellow stay-home parents would be able to apply for credit cards without their spouse’s signature. Last Wednesday Cordray unveiled a proposed rule change that would allow people over the age of 21 to apply for lines of credit on the basis of shared household income.
Cordray called the rule change, “common sense” and said in a statement: “When stay-at-home spouses or partners have the ability to make payments on a credit card, they should be able to obtain a card in their own name.”
Domestic Partners and Stay-Home Spouses
Of note is the wording of the proposal, which acknowledges that the “application of an ‘independent income’ standard” when considering credit applications “might restrict access to credit for consumers who do not work outside the home, including certain married women” but it doesn’t specifically mention stay-home dads. It does, however, refer to “partners who do not work outside the home,” which could be interpreted to mean domestic partners, same-sex or otherwise.
Whether the amendment would affect same-sex partners who live in states that do not allow them to marry is still unclear. The agency is accepting comments about the amendment until 60 days after the publication of the proposed amendment – or about the next two months.
One way that partners, whatever their gender or marital status, might be able to use each other’s income to apply for a credit card is to put funds into a joint account. The proposal says that “if the household member’s salary is deposited into a joint account shared with the applicant, a card issuer may consider that salary to be the applicant’s income.”
What About Authorized Users?
In the meantime, stay-home parents could have access to a credit card by having their partners add them as authorized users to existing credit accounts – something that we bet Mitt Romney does for Ann. Some credit card companies, like American Express, allow cardholders to put spending limits in place for authorized users. This would be appropriate and useful for a parent adding a child to their account, or a boss adding an employee.
If Ann Romney is an authorized user on her husband’s account but has a spending limit put in place, she may be glad to know that she can http://www.credit-land.com/ all her own when the CFPB rule change goes into effect.