If you’re one of the millions of stay-at-home moms and dads who have been unable to get a credit card in your own name because you don’t have your own income, the Consumer Financial Protection Bureau has just made it easier for you to qualify.
The CFPB has issued a rule change that allows credit card issuers to consider household income, not just individual income, in approving card applications and credit line increases.
Previously, the 2009 Credit CARD Act required issuers to consider the applicant’s ability to pay based only on his or her independent income or assets. The new rule allows card issuers to consider income that a stay-at-home applicant shares with a spouse or partner “if the applicant has a reasonable expectation of access to it.”
The CFPB said that otherwise creditworthy individuals had been turned down for credit card accounts because they have no independent income, although they have access to household income.
Citing Census Bureau data, the CFPB says that more than 16 million married people do not work outside the home, or about a third of married couples. The CFPB’s new rules apply to all applicants 21 or older regardless of marital status.
Credit card issuers will have six months to comply with the new regulation.
Not only will nonworking spouses now be able to get credit on their own, but they’ll be able to build their own credit history without relying on their husband or wife. That can prove to be a big problem if the couple later divorces or the main breadwinner dies, and the nonworking spouse finds himself or herself with much lower income and no ability to access credit.
Before the new amendment, dependent spouses had to apply jointly for credit or be added as an authorized user on existing accounts.
At the same time, however, the new rule does carry some risks for the nonworking spouse. If the couple divorces, the nonworking spouse will be responsible for paying his or her own debt without the help of the other spouse.
Whatever the situation, it’s a good thing that the CFPB will now allow more people to access credit on their own rather than force them to rely on others.
Spouses also shouldn’t be penalized for giving up a paying job in order to be an unpaid in-home caretaker when they have as much access to household funds as the other spouse.