Personal Finance

At-Home Moms Applaud Fix to Credit Card Law

Janna Herron, Bankrate
Peter Dazeley | Getty Images

A federal rule that kept many stay-at-home parents from getting a credit card in their own name could soon get the boot.

The Consumer Financial Protection Bureau plans to propose a new rule by November that allows credit card issuers to consider household income on applications from nonworking spouses, according to testimony by the agency's director Richard Cordray on Thursday before Congress.

The proposal will unwind a final ruling last year from the Federal Reserve stipulating that only individual income could be considered for getting a credit card, even a secured credit card. Before, household income could be used.

The rule was intended to keep young consumers from using their parents' income to qualify for a credit card and then racking up thousands of dollars of debt in their own name. But it also had the unintended consequence of denying stay-at-home moms and dads access to credit.

"It assumes that you, as the wife or husband, don't have access to the household income, which is a bad assumption," says John Ulzheimer, president of consumer education at "The household income is generally tapped by more than one person."

The ruling rankled housewives and husbands across the country. Holly McCall, a Virginia stay-at-home mom, led a grassroots charge against the rule, starting an online petition and speaking personally to Cordray about the issue earlier this year. Many contended the rule stunted their ability to build credit.

Cordray told the House Financial Services Committee on Thursday that, over the summer, the CFPB determined that the issue was "a significant problem."

"There are tens, perhaps hundreds, of thousands of individuals who have been denied access to credit because of the way the law was interpreted," Cordray said.

The CFPB also determined that it can't simply clarify the rule, but must write a new rule. However, he doesn't think that Congress needs to rewrite the existing language found in the Credit Card Accountability, Responsibility and Disclosure Act of 2009.

Cordray promised the new rule will be ready for review by the time Congress reconvenes after the election.

Do you think this makes sense? Why or why not?