There is no better way to get into a financial bind than unfettered use of a credit card. People who have found themselves overwhelmed by debt have found relief in personal bankruptcy. But after bankruptcy, the hard work of rebuilding credit begins.
Anyone old enough to apply for a credit card is probably familiar with television shows from the ’50s and ’60s that centered on the “typical American family.” Dad worked all day, while Mom stayed at home, vacuuming in her Sunday best. In comedies like “I Love Lucy,” it was often the wife’s job to spend the husband’s money. Even on “The Flintstones,” Wilma and Betty would head to Lord & Taylrock’s, accompanied by a bugle blow and that universal shopper’s rallying cry, “Charge it!”
As far as we have come since those days, stay-at-home spouses and partners still have trouble getting their own credit cards. The Credit Card Accountability Responsibility and Disclosure Act of 2009, commonly referred to as the CARD Act, managed to make the problem worse.
The CARD Act originally required credit card companies to verify an applicant’s ability to pay before extending any credit. The card companies interpreted the rule to mean that the individual applicant had to be able to pay the bill on his or her own, without the help of another person’s income.
Rather than protecting consumers from predatory card issuers that would hand out credit cards like candy, the provision ended up depriving spouses and partners who chose not to work of the financial independence that often starts with establishing a solid credit history.
The Consumer Financial Protection Bureau caught on eventually. The agency recently announced a change to the rule. Credit card companies may now consider third-party income that an applicant has access to (or a reasonable expectation of access to) when evaluating the applicant’s ability to pay. The third party need not be a spouse, either. The only condition, apparently, is that the applicant be 21 or older.
Source: Collections & Credit Risk, “Consumer Bureau Eases Credit Rules for ‘Stay-at-Home’ Parents,” John Adams, April 30, 2013