Hello, I have a question about what happen’s when a spouse doesn’t have their own income himself/herself and they want to apply for a credit card. Can they put down the total household income as their own? Can you explain a bit about the process and if it’s different for different banks?
Mohammad via e-mail
Hi Mohammad, thanks for the great question. I’m going to give you a short answer and then a longer answer explaining a bit more background.
Short Answer: You can list household income.
When the CARD Act became effective on February 22nd, 2010 on the of the requirements was that credit card issuers need to evaluate a consumers ability to pay back any debts they might incur before opening a new credit card account or issuing a credit limit increase. The chief way credit card issuers did this was to look at an applicants income. Under the CARD Act card issuers were only allowed to look at the individual applicants income and assets.
The reason that this was introduced was to reduce predatory lending practices that targeted the very young and those unable to pay back loans due to insufficient income. Unfortunately this had the unintended side effect of also making it almost impossible for stay at home spouses to receive credit and build credit history even if they had an employed spouse or partner that had the financially ability to pay down these loans.
On November 4th, 2013 the CFPB announced that this restriction would be changed. If a credit card applicant is over the age of 21 years of age credit card issuers are able to consider third party income (e.g income that a spouse or partner earns/household income) when making lending decisions as long as they have a reasonable expectation of access to these funds. The full rule change can be viewed here.
This means your partner (or yourself if you’re not the primary income earner) can list household income on their credit card applications. I hope this answers your questions and as always if you or anybody else has any questions about household income and credit card applications or just in general, please let us know in the comments below or by sending us an e-mail. You can view more readers questions that we’ve answered here.