Before the Credit Card Accountability Responsibility and Disclosure Act of 2009, household income could be considered on credit card applications. This meant that someone who had no individual income but shared in the household income could apply for credit in his or her name.
But after the federal law was enacted a restriction was established to keep young adults out of credit card debt and prohibited household income from being considered. If you applied for credit you must have an income.
An unintended consequence occurred that caused creditworthy individuals like stay-at-home spouses or partners and dependent kids under 21 to be denied for credit cards. According to the Consumer Financial Protection Bureau (CFPB) “a significant number of individuals may be affected who have access to income from an employed spouse or partner.”
In April 2013 the CFPB updated existing regulations to make it easier for spouses or partners who do not work outside of the home to qualify for credit cards and the credit card companies had 6 months to comply. Some card issuers adjusted their policies prior to the 6-month compliance date as it was left up to each individual card issuer.
On November 4, the Consumer Financial Protective Bureau’s final rule took effect. Now all credit card issuers must comply with the updated final rule that lifted the restriction requiring only individual income be considered when applying for credit.
Credit card issuers have no choice but to consider household income, rather than individual income; it is no longer an option.
Just in time for the holiday season, stay-at-home spouses or partners, dependent kids under 21 and others with similar households and who would otherwise be creditworthy can apply for individual credit cards using household income. Credit can be obtained once again using the household income rather than individual income.