The federal consumer watchdog is taking steps to make sure stay-at-home parents can get a credit card.
The Consumer Financial Protection Bureau on Wednesday proposed a rule that allows an applicant to use a spouse's or partner's income to qualify for a credit card. Before, only individual income could be considered by a credit card issuer under a Federal Reserve ruling last year on the Credit Card Accountability, Responsibility and Disclosure Act.
The proposed rule covers consumers who are 21 years old or older.
The CFPB said industry data showed that some individuals with good credit were declined for a credit card because of the current ruling, even though they could make payments. Many of those may be stay-at-home spouses or partners with access to income from an employed partner, the agency found.
CFPB Director Richard Cordray called the changes "common sense," in the agency's press release.
The CFPB took notice of the issue after Virginia stay-at-home mom Holly McCall started an online petition against the original ruling. She also spoke personally with Cordray about the issue earlier this year. McCall was turned down for a store credit card because she personally didn't have any income.
This would be a big win for nonworking spouses if the CFPB passes the rule. (The agency is accepting comments on the proposal for the next two months.) They'll be able to get a credit card in their own name and build credit history without relying on their partner. Currently, they're dependent on their partners to apply jointly for new credit cards or to be added as an authorized user on existing cards. Even issuers of secured credit cards require individual income to qualify. That won't be the case too much longer if the CFPB puts the proposed rule into effect.
However, the new proposal also comes with risks for the stay-at-home partner if the marriage or relationship falls apart. The homebound partner will be required to pay the credit card if it's in his or her name only (unless you live in one of the nine community property states). The employed partner has no legal obligation, even if his or her income was used to qualify for the card. So, the stay-at-home partner is on the hook -- a good reason to get alimony.
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