CFPB Proposes Changes to Make it Easier For Stay-At-Home Spouses to Get Credit

The Consumer Financial Protection Bureau (CFPB) recently proposed a new rule that would remove a provision of the CARD Act that currently makes it difficult for stay-at-home spouses or partners to obtain credit. Under present regulations put into place in October 2011 as part of the CARD Act, a card issuer generally may only consider an individual card applicant’s income and assets when making a decision on whether to grant credit. The proposed rule would allow credit card issuers to ask card applicants 21 and over for income to which they have a “reasonable expectation of access,” which could include household income, and to remove all references to the “independent” ability to pay.

The proposed rule also contains three examples of situations where it would be permissible to consider income as shared or “accessible”:

• The other household member’s salary is deposited into a joint account shared with the applicant;
• The other household member regularly transfers a portion of his or her salary into an account that the applicant can access and uses for the payment of household or other expenses; or
• The other household member does not transfer any portion of his or her salary to the applicant, but instead regularly uses the salary to pay the applicant’s expenses.

While the current rule was created so that banks wouldn’t give credit to people without the means of repaying their debt, many critics complained that it often deprived stay-at-home spouses of obtaining credit in their own name and establishing their credit history. According to the CFPB, more than 16 million married people do not work outside the home and it figures that one out of three married couples would have easier access to credit if this revision is adopted.

The CFPB is currently seeking public comment on this proposal.