For stay-at-home spouses, getting credit has long been a pain in the ass. When the CARD Act passed in 2009, it required credit card companies to assess the independent income and resources of each applicant to determine if they’d be able to make payments. The result of that evaluation decided whether or not the person was eligible for a new line of credit or an increased limit on their account. But while the provision was designed in part to protect students (by making sure that they didn’t drown in a sea of debt before getting themselves a real-world job), it actively hurt stay-at-home moms and dads who either didn’t earn an independent income or who earned a small amount from part-time work.
In short, the CARD Act basically made it impossible for stay-at-home moms and dads to claim a combined income on their credit card applications. It should have been easy to see the unintended consequence in advance. But for some reason, no one did anything about it, and millions of people who had the ability to pay their bills were suddenly unable to get credit. Inevitably, the CARD Act oversight caused an uproar. When stay-at-home mom Holly McCall, of Vienna, Virginia, started a petition last year to get the Consumer Financial Protection Bureau to fix the error, she ended up with over 50,000 signatures.
It worked. The CFPB was compelled to re-examine the CARD Act’s shortcomings, and the bureau has finally submitted a rule change to the Federal Register. In other words, the people have spoken, and the government has listened. What a concept!
According to a recent New York Times blog post, the revision will allow stay-at-home spouses and partners to claim a shared income on their credit card applications – as long as they are over 21 years old and have a “reasonable expectation” of being able to draw on the combined earnings.
The use of the word “partners” in the revision is also a nice touch from the CFPB, because it allows members of same-sex unions to take advantage of shared income applications. And since a couple doesn’t have to be legally married, this will work just fine in states that have yet to legalize gay weddings. Ever since the CARD Act’s inception in 2009, the number of credit approvals has dropped steadily, but the CFPB expects the revised rule to change all that.
Of course, we’d never endorse taking on more plastic debt than you can pay off. Building credit responsibly, though? That’s an idea that we do support, and thanks to the new changes, if you’re a stay-at-home wife or husband who’s been struggling with credit card applications over the last few years, you might find it easier to do just that.
What do you think? Is this a wise move from a group of lawmakers and businesspeople who have been paying attention to the public’s needs? Or do you think it’s the wrong way to go for a mostly-broke society that’s becoming more and more dependent on the “magic money” of credit cards? Will this help you with your own finances? Let us know your thoughts in the comments below.