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After complaints about the effect of the Credit Card Act on stay at home parents, the CFPB will propose a new rule to remedy the situation. It is yet another stunning example of how our legislators continue to enact laws with unintended consequences, one that was supposed to prevent college-aged students from getting in debt over their heads has managed to tear a strip of dignity from a politically coveted demographic – stay-at-home moms.
To say it has it has stirred up a hornet’s nest is an understatement and right now, politicians and regulators can’t find enough cover to protect them from the stings.
It seems that a provision of the Card Act of 2009 that was designed to curb lending to college students by requiring that they be able to qualify based on their own income, and not that of their parents, also applied to anyone who can’t verify personal income. So, moms and dads who leave the work force in order to raise their kids have been subject to the law and many have found it difficult, if not impossible to qualify for credit on their own.
Under this clause, the only way a homemaker can obtain credit is if a spouse co-signs for the loan or credit card. Never mind that they may have an impeccable credit history, and never mind that they work every bit as hard as the family’s bead winner; or that many of them leave well-paying jobs to do what needs to be done; they are now relegated to the ranks of the non-creditworthy in the eyes of lenders.
Stay-at-home moms and dads are not standing still for this, and stay at home mom Holly McCall launched a massive petition campaign that collected over 50,000 signatures. Several signers of the petition and supporters of changing the rule personally delivered their request to the door of the CFPB, the regulating body which inherited the provision when it became active early this year.
The CFPB claims to have heard the complaints loud and clear, and after ‘studying’ the issue they are set to propose a new rule to the Credit CArd Act that will make it easier for this segment of the population to obtain credit, despite their lack of personal income. You can be assured that, as the election draws nearer, we are likely to see the politicians line up behind efforts to reverse this travesty of bureaucracy.
Credit Options for At-Home Spouses
For the millions of stay-at-home moms and dads suffering the indignity of not being able to qualify for their own credit cards, the fix can’t come soon enough. But, as bureaucracies and the legislative process go, it probably won’t come soon enough. In the meantime, they are left with few options for obtaining credit in their separate names.
While this hurts all stay-at-home moms and dads, it can be devastating for those who are divorcees or widowed. Those who reside in community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin), may escape the indignity as their laws consider earned income as the property of both spouses. But, in other states, at least for now, they will need to be able to build a credit history on their own.
One of the quickest ways to establish, or re-establish credit is by obtaining a secured credit card which offers all of the advantages of plastic but with a credit established by a savings deposit. Issued as a Visa or MasterCard, secured cards enable you to transact as you would with an unsecured card with all of the benefits and protections they offer, such as purchase and fraud protection. Your credit line is based on a percentage, from 80 to 100 percent of your savings deposit.
After demonstrating on time payments for a period of time, you will not only have an established credit history, but your score will increase markedly. Within a fairly short period of time, you will begin to attract pre-approved offers from the credit card companies.
One secured card that stands out for it’s low fees, low interest rates and timely reporting to the credit bureaus is the Platinum Zero® Secured Visa® Credit Card from Applied Bank®
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