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CFPB Proposes New Credit Card Rule for Stay-At-Home Parents

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In the past, many stay-at-home spouses across the country had difficulty obtaining a credit card in their own name thanks to a provision from a law designed to protect them. But recently, the federal consumer watchdog proposed a rule that it says will make “common-sense” changes to the rule.

The federal Consumer Financial Protection Bureau recently proposed a new rule that will make it easier for stay-at-home spouses, who rely on their partner’s income, to obtain credit cards in their own name, according to a report from the agency. Currently, a provision of the Credit Card Accountability, Responsibility and Disclosure Act mandates that lenders may only consider an individual’s personal income when determining whether they qualify for an account for which they applied.

However, many experts and advocates have argued this unfairly locks out stay-at-home spouses because they necessarily don’t have their own income in most cases, the report said. That in turn can cause major problems for them in the event of the death of or separation from their wage-earning partner, because it can limit their borrowing history and therefore lock them out from some lines of credit.

Anecdotal and actual evidence compiled by the CFPB shows that millions of people across the country may have been denied for lines of credit for which they should have otherwise qualified, despite their ability to afford payments on it, the report said. Further, the U.S. Census Bureau found that more than 16 million married Americans don’t work outside the home, meaning about one in every three marriages has a stay-at-home spouse, on average.

“When stay-at-home spouses or partners have the ability to make payments on a credit card, they should be able to obtain a card in their own name,” said CFPB director Richard Cordray. “Today the CFPB is proposing common-sense changes that would facilitate credit access for spouses or partners who do not work outside the home.”

Therefore, the proposed rule change will allow all consumers over the age of 21, regardless of marital status, to list the income of a person to whose money they have a “reasonable expectation of access” on their credit card application, the report said.

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Consumer groups and other experts lobbied the CFPB to change the rule for stay-at-home spouses for several months, arguing that it could pose significant problems for many consumers across the country.

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