Credit for 5 Year Olds, Yes. For Stay At Home Moms, No.
The credit industry is tightening up their policies in the wake of the great recession, limiting the amount of risk that they open themselves up to by giving out more credit than people can actually pay.
At least, that is the argument behind a new policy based on federal rules that may change how household income is determined and could result in leaving stay at home parents without credit — disproportionately women.
Via WHEC News in Rochester:
Stay-at-home parents may no longer be allowed to get their own credit card.
That’s because new federal rules that say banks will no longer be able to give credit cards to people who can’t prove an individual source of income.
The new rules are meant to keep credit cards out of the hands of people who can’t afford it, but they could negatively impact stay-at-home parents, and people who have a spouse in the military. They could also mean that if a couple gets divorced, the stay-at-home parent would have no credit history.
A lack of credit history after a divorce could have a devastating effect on women as well, as women often become the custodial parent. Credit history is used for everything from renting apartments to entry level jobs. And, of course, credit history is used for…getting credit.
The credit card industry is already benefiting from rules that would allow them to continue to collect unpaid debt even after a bankruptcy, a move many project will hurt women who will see their ex’s have to pay the companies first and the child support with whatever is left. Should credit be unattainable without a separate source of income, some spouses who stay at home may find themselves without home, income, financial support and now any way to establish any of these things.
Does the credit industry need to reign in its lending practices? Yes, surely, but first it needs to look at ridiculous policies that it has in place for granting cards first, such as the ones that allowed this 5 year old to get his own card while his parents were simply trying to end the onslaught of offers he was receiving. Targeted, reasonable credit granting is possible — and if the companies could put those policies in place, the government wouldn’t have to institute additional rules reign them in.
Photo by Lotus Head from Johannesburg, Gauteng, South Africa (sxc.hu) [GFDL (www.gnu.org/copyleft/fdl.html), CC-BY-SA-3.0 (www.creativecommons.org/licenses/by-sa/3.0/) or CC-BY-SA-2.5-2.0-1.0 (www.creativecommons.org/licenses/by-sa/2.5-2.0-1.0)], via Wikimedia Commons