CFPB Proposes Rule to Make Credit Cards Available to Non-Working Partners

The Consumer Financial Protection Bureau (CFPB) Wednesday proposed changes to existing regulations to make it easier for spouses or partners who do not work outside of the home to qualify for credit cards. The proposed would allow a stay-at-home spouse or partner to declare shared income from a spouse or partner when applying for a credit card.

Under current regulations codified in the Credit Card Accountability Responsibility and Disclosure Act (CARD Act), a card issuer generally may only consider the individual card applicant’s income or assets due to specific measures that require card issuers to evaluate a consumer’s ability to repay.

But data made available to the CFPB suggest that some otherwise credit-worthy individuals have been declined for credit card accounts under the current regulation, even though they have the ability to make the required payments.  The agency said that discussions with industry representatives indicated that a significant number of these individuals may be stay-at-home spouses or partners with access to income from an employed spouse or partner.

“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.”

The proposed revision would allow credit card applicants who are 21 or older to rely on third-party income to which they have a reasonable expectation of access.  Although the proposal applies to all applicants regardless of marital status, the CFPB expects that it will ease access to credit particularly for stay-at-home spouses or partners who have access to a working spouse or partner’s income.

The financial services industry seems to generally agree with the rule change.

“ABA applauds the CFPB for its proposal to amend federal regulations to make it easier for stay-at-home spouses to get access to credit and build a credit history,” said Kenneth Clayton, EVP of legislative affairs and chief counsel for the American Bankers Association. “The Bureau responded to a bipartisan consensus in Congress – most notably Financial Institutions Subcommittee Chairman Shelley Moore Capito (R-W.Va.) and Ranking Member Carolyn Maloney (D-N.Y.) – to address this issue. While the devil is in the details, the CFPB’s willingness to address this problem is important. It’s the right thing to do and will help millions of Americans in the process.”

The proposed rule is available at: http://files.consumerfinance.gov/f/201210_cfpb_CARD-Act-proposed-rule.pdf