A regulation that prevented people who don’t work outside the home from qualifying for lines of credit has been amended, making it easier for stay-at-home parents and others without incomes to be approved for credit cards.
The Consumer Financial Protection Bureau (CFPB) proposed the amendment to the Credit Card Accountability Responsibility and Disclosure Act (CARD Act) in October 2012, but it wasn’t approved until this week. The CARD Act, which took effect in 2009, required credit card issuers to consider only the income and assets of the person applying for credit. That meant household income was no longer an acceptable means of evaluating an applicant’s ability to pay back debt. Spouses who stayed home to care for a child, elderly parent, or for any other reason found themselves unable to qualify for a credit card in their own name.
Income considered regardless of marital status
Under the CFPB’s amendment, applicants 21 years old and older can list income from a spouse or partner as a resource for credit issuers to take into account when considering their creditworthiness. If individuals have “a reasonable expectation of access” to income from someone else in their household, it will count toward their own resources whether or not they are married to that person.
More than 16 million stay-home spouses
Recent U.S. Census data shows that over 16 million married people do not have jobs outside the home—about one-third of married couples. Industry experts say that people who were otherwise creditworthy have been turned down for credit cards because of the CARD Act, and expect this amendment to correct that oversight.
When the CFPB proposed the amendment last fall, they got more than 300 comments from consumers, retailers, banks, credit card issuers and others with an interest in the outcome. They considered those while making their final decision, which was sent to the Federal Register on Monday and will take effect as soon as it is published. Credit issuers will have six months to update their application process to comply with the new rule.
