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Credit and stay-at-home moms

By Lucy Lazarony ·
Thursday, February 17, 2011
Posted: 2 pm ET

Getting a credit card may get tougher for stay-at-home moms.

A proposed rule from the Federal Reserve Board could prevent a stay-at-home mom without independent income from being approved for a credit card in her own name.

According to the proposed rule, credit card issuers must consider a person's independent income rather than household income when determining a consumer's ability to make payments and approving credit.

"When evaluating a consumer's ability to make the required payments before opening a new credit card account or increasing the credit limit on an existing account, card issuers must consider information regarding the consumer's independent income, rather than his or her household income," the Federal Reserve Board stated in a press release explaining the proposed rule.

The proposal would clarify portions of the Federal Reserve's final rules implementing the Credit Card Accountability Responsibility and Disclosure Act of 2009. The last of these rules went into effect on Aug. 22, 2010.

An exception to the proposed rule regarding independent income applies to married credit applicants living in community property states.

According to the proposed rule, "If the consumer and the spouse reside in a community property state where state law grants the consumer joint ownership of income or assets acquired by the spouse during the marriage, the income or assets are considered the consumer's income or assets."

So folks living in community property states would be able to include their spouse's income and assets when applying for a credit card.

A spouse's income and assets are always considered when applying for a joint credit card account.  With joint credit card accounts, both spouses share ownership of the account and both are liable for repaying the debt.

Another way for a nonworking spouse may have access to credit is by being added as an authorized user to their spouse's credit card account.

Authorized users are entitled to use the credit extended to the cardholder but they have no legal responsibility to pay the bill.

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