CFPB Gives Stay-at-Home Parents Credit-Card Rule Fix

Thursday, September 27th, 2012

Help is on the way: a federal agency is going to propose a rule that will make it easier for many stay-at-home parents without their own incomes to qualify for a credit card.

That is good news for many stay-at-home parents. An amendment to the Federal Reserve’s Card Act rules that took effect last October was intended to keep young consumers from using their parents’ income to qualify for a credit card and then racking up thousands of dollars of debt in their own name. But it also had the unintended consequence of denying stay-at-home moms and dads, who rely on a spouse’s income, access to credit, even if they have perfect credit.

After gathering information and input from the public this summer, it was determined that it is a significant problem. There are hundreds of thousands of people who perhaps have been denied access to credit as a result of a specific interpretation of the Credit Card Accountability Responsibility and Disclosure Act, known as the CARD Act.

Rather than amend or clarify the current legislation, the Consumer Financial Protection Bureau determined to proceed with rule-making and adjust the income standard. The CFPB is aiming to make it easier for stay-at-home spouses to obtain credit cards in their own name as well as larger lines of credit. Notably, the CFPB plans to propose a new rule by November that allows credit card issuers to consider household income on applications from nonworking spouses.

Not only the CFPB but also groups representing banks agree that changes are needed. Stay-at-home spouses and those working part time lost their opportunity to gain financial independence when the Fed wrote the requirement.

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