Household Income Will Be Permitted Again on Credit Card Applications

When the Credit Card Accountability Responsibility and Disclosure Act (“CARD Act”) was passed, it had the unintended (though entirely predicted in advance) consequence of shutting stay at home spouses out of getting their own credit.

It required that each borrower be evaluated on their own ability to repay, and as a consequence credit card companies no longer asked for household income on applications but instead asked for personal income.

Stay-at-home moms couldn’t get their own credit cards but had to rely on their husbands, they couldn’t build their own credit, the law carried the potential to re-institutionalize financial subjugation in such relationships.

The New York Times is reporting that the Consumer Financial Protection Bureau has published revised regulations which “lets spouses and unmarried partners who are 21 or older and don’t work outside the home, apply for credit based on shared income.”

The new rule “removes references to an “independent” ability-to-pay” when a credit card company evaluates an application and replaces it with a requirement that card issuers “consider the consumer’s ability to pay.”

The difference here is that it’s no longer necessary to look only at the income the individual has. Instead, a card issuer looks to the income that the individual “has a reasonable expectation of access” to.

Put another way, spouses — and, under this rule, domestic partners — can list household income on their credit card applications in order to qualify for credit.

Credit card companies will have six months to comply with the new rules. So spouses and partners will be able to show their combined income and not just individual income on their credit card applications in the coming months.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Thanks for this good news. You wrote:

    “Credit card companies will have six months to comply with the new rules. So spouses and partners will be able to show their combined income and not just individual income on their credit card applications in the coming months.”

    So for homemakers planning an AOR before the six months are up, do you suggest completing the applications based on the new regulations, or waiting the full six months before doing so?

    Thanks for any opinions you can offer!

  2. I always put household income, since the household can be one unit if all income and bills are combined.

  3. It seemed strange to me to ask for an individual income but then ask for costs such as mortgage. For most couples these are shared. Actual cost to the individual is a fraction of what is asked in the evaluation.

  4. Very good news! Thank you for posting this info. This will make a big difference for me since the vast majority of income us is through my spouse.

  5. @Unhappy – is it explicitly stated in apps that you have to list 100% of mortgage/rent as your liability? I’ve always split it down the middle. I figure it’s my app and if I’m only allowed to report my part of the income, I’m only going to report my half of the rent too…fair is fair right?

  6. @Brabbit – from the article:
    “The change, first proposed by the bureau last fall, lets spouses and unmarried partners who are 21 or older and don’t work outside the home, apply for credit based on shared income.”

    “The requirement was meant, in part, to protect students from getting into trouble with credit card debt”

    So it appears that kids are not included, by design.

  7. Ever since thy changes this originally to be self income only, the wife and I have continued to list household anyway. When applying once for a citi card the csr even said that it was fine to give them household. Either way, glad this is reversed. It helps where incomes are not similar between couples yet you want to be able to get the wife’s card with a good limit for 0% or lots of manufactured spend.

  8. @CW:
    Regardless of what you state as your financial liability, YOUR credit report lists the full balance of any obligations (loans, martgages, revolving credit, etc.) that are officially reported under your name.

  9. In every online application I can recall, there’s a line for Employer and a line for Income. It doesn’t say “Your Employer”. It doesn’t say “Your Income”. I fill in the household income and the employer for that income. I’ve never had any problem as a result.

    If you live in a community property state (primarily the southwestern US) half the income legally belongs to each spouse. In those states, denying credit because your name is not on the paycheck would make no sense.

  10. Heh…I always put household gross income on there anyway, if they didn’t explicitly state “individual”. It’s how taxes are handled, so as far as I’m concerned that’s the standard.

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