No More Credit Cards for Stay at Home Moms?

One of the Credit CARD Act’s goals is to make sure that individuals can really afford to repay what they borrow. In particular, the Fed wants to protect teenagers from digging themselves into a deep hole of credit card debt.

Sometimes, however, good intentions can result in inconvenient consequences.

In order to better gauge whether a borrower can repay their debt, the Fed has insisted that credit card applications can no longer request a consumer’s “household income.” Instead, issuers must ask for the borrower’s individual income or salary, to better evaluate their ability to repay the debt. Issuers must not only ask for this information before opening a new credit card account, but also when increasing the credit limit on an existing account as well.

What does this mean for married stay at home moms (and dads)? Under the current provisions, if no income is present, a co-signer is required. That means, if nothing else, that married homemakers with no income will become increasingly dependent upon their spouses.

It does not necessarily mean that the homemaker will be denied credit altogether, though there will certainly be more hoops to jump through. In addition to salary, issuers may also consider interest or investment income, retirement benefits, etc. as well as the consumer’s credit history to determine their creditworthiness.

Other ways to get credit
The suggested amendment takes effect October 1, 2011, so if you are a homemaker without income, you should have plenty of time to apply for credit in your own name while using your household’s income. The income requirement does not apply to existing credit card accounts, so any lines of credit that you have in your name before then shouldn’t automatically be taken away.

Another alternative is to become an authorized user on someone else’s account. An authorized user is someone who has a card in his or her name and has full charging privileges, but is not liable for the debt. As the credit account will usually appear on your credit report, this is also an excellent way to establish or rebuild your credit history.

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