A new proposed rule from the Fed would require lenders to consider only a potential borrower’s personal income when determining whether they qualify for a line of credit, according to a report from MarketWatch. As a result, those without incomes of their own, such as stay-at-home moms, would be shut out from the borrowing system, which can turn troublesome in the event of divorce or death.
“We are concerned that the board’s proposal will hamper a stay-at-home mom’s ability to establish her own independent credit history by applying independently for a card,” a letter from New York Representatives Carolyn Maloney and Louise Slaughter said, according to the news source. “Many stay-at-home moms have a strong work history, yet the proposed regulations ignore their demonstrated credit-worthiness because of their lack of current market income.”
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Currently, lenders are allowed to also consider household income when determining eligibility, the report said. This can be crucial in allowing stay-at-home moms and others without income of their own to start and improve their own credit history.
Many lenders may now be wary of granting lines of credit to consumers who have a limited credit history, or even gaps in an otherwise healthy borrowing record. In recent months, many have added more stringent requirements to qualify for credit cards.