The Credit Card Act and the Stay-at-home Mom

In the modern society of today, it is a full time job to raise children – let alone provide for their needs appropriately. With unemployment floating around 8% according to recent reports and the number of families considered poverty level, there are more Americans, namely mothers, working full time jobs right at home.

Any parent will tell you that raising children, no matter the number, takes a lot of energy, time, money, and considerable effort. Nevertheless, the rewards are ten, twenty, or infinity fold for the parent that treasures their child. Enter the 2009 Credit Card Act which changed the way lenders, namely credit card agencies, determined 1) who qualifies for credit cards and 2) the amount of credit they could be extended.

As most know, students are often extended credit, or were, in the past without having some means of income. This often meant that parents were left to pay the bill. The Credit Card Act focused on this aspect to help counteract the rising ‘true’ cost of college, but the language also affects stay-at-home parents. In the act, only persons with income are considered when determining credit, not the household income. This means that most of the credit cards that in circulation now would not pass this test because they are based on the household income which may include funds attributed from indirect or not related to employment.

In theory, the Credit Card Act sounds like a step in the right direction when determining credit worthiness and interceding on behalf of tax payers who may have to foot the bill when borrowers use credit they can’t afford. But for the home-bound individual, not having an active line of credit will impact the overall credit picture for the family. When rebuilding, establishing, or applying for other forms of credit, lenders will evaluate all individuals involved, typically the primary and his or her spouse.

This means that without active credit one individuals inactivity will drag down both, making approval harder on home loans, joint lines of credit, and even banking accounts.