The Credit Card Accountability, Responsibility, and Disclosure Act (CARD Act), was passed with strong bipartisan support in 2009. One provision of the CARD Act denied credit cards on the basis of family income, that is, when that income was not individually that of a spouse’s. In a divorce, this is often the financial position of a wife who has little or no income of her own.
“As a result, “at-home” spouses without paid work, who would likely have been approved for credit cards before the CARD Act went into effect, suddenly found it difficult to obtain credit in their own names, despite high family income and strong individual work and credit histories. Women who had put their careers on hold to care for their families, and later found themselves divorced, were especially vulnerable to the serious financial problems a lack of credit can cause,” writes Jeff Landers, the author of the new book, Divorce: Think Financially, Not Emotionally – What Women Need To Know About Securing Their Financial Future Before, During, And After Divorce.
Last week the Consumer Financial Protection Bureau (CFPB) announced that it made changes to a requirement in the CARD Act that called “for companies to verify applicants’ ability to pay before approving them for credit cards.”
The new rule does not say that a credit card company must consider spousal income, only that they may consider it. This means that “credit card issuers will now be able to consider the income and assets of a spouse or partner when evaluating a person’s credit card application, if the applicant is at least 21 years old and has ‘reasonable expectation of access’ to said income and assets,” writes Landers.
The change takes effect within six months and applies to millions of “stay-at-home-Moms” who were, inadvertently, negatively affected by the CARD Act.
Landers notes that a woman with a pending divorce may wonder how the action might affect her “reasonable expectation of access” to family income. In his view, he writes, “this is all the more reason for women to maintain credit cards in their own names throughout their marriage, rather than wait until divorce is on the horizon and scramble to establish credit then.”
