The Federal bank is proposing that anyone who cannot show an income source should not be able to obtain credit in their own name. Seems reasonable, right? If you are a stay at home parent, you may not think it is reasonable at all. While you manage the household finances, without an income of your own, you will be unable to obtain credit. All finance decisions will have to be based on your spouse’s income and credit.
In 2009, Congress passed the Credit Card Accountability, Responsibility, and Disclosure Act. One of the provisions of the Act restricted banks from issuing credit cards to students under the age of 21 who could not show a source of income. The point was to protect students from running up huge credit card bills when they clearly had no steady financial means of repaying the debt. Whether this is a case of the government protecting us from ourselves, or from the creditors is not the issue today.
Today, the Fed is writing the rules to go along with the law and are proposing that credit applications be based on individual rather than household income. This feels a little like we are reverting back to the time when wives had to get their husbands permission to open credit or bank accounts. While it is important that people use credit wisely and only borrow what they can afford to pay back, the people being impacted by this potential law are the same people who are successfully managing the household finances.
In a day and age when credit impacts everything we do from buying or renting a home to the rates we pay for insurance, it is frustrating to think that someone may be denied an opportunity or receive a higher rate simply because they cannot establish or grow their own positive credit history.
What are your thoughts?