If asked to identify the number one reason why an applicant for a credit card would be rejected, most people would probably answer bad credit or poor credit history. While this is certainly true, another reason for rejection is rapidly emerging thanks to recent congressional action.

According to reports, more and more stay-at-home parents are finding their applications for store credit cards or traditional credit cards rejected/declined thanks to a provision in the CARD Act of 2009.

For those unfamiliar with the CARD Act, it was enacted by Congress in response to skyrocketing levels of credit card debt among Americans and the growing call for reform of the credit card industry on Capitol Hill. Specifically, it abolished certain fees and charges, mandated that credit card companies provide more information to consumers, and banned the raising of interest rates retroactively, among other provisions.

However, the CARD Act also contained a provision stating that as of October 1, 2011, credit card companies could no longer consider household income/combined income when issuing a credit card, meaning they can now only consider the lone applicant's income/ability to pay.

This scenario is understandably causing both surprise and frustration for many stay-at-home parents seeking to obtain a credit card -- especially during the holidays.

"There is a seasonality to applying for credit cards, and I think all of a sudden it's going to hit people, 'Oh my goodness. I'm getting rejected. Why is that?'" said Bill Hardekopf, CEO of LowCards.com.

In order to deal with this new reality, financial experts advise stay-at-home parents to consider some of the following steps if they want to secure their own access to a credit card:

  • Apply jointly, meaning have your income-earning spouse apply for the card with you
  • Apply to become an authorized user on your spouse's credit card
  • Secure employment in a part-time or work-from-home capacity

It is worth noting that stay-at-home parents living in a community property state -- like Texas -- are not subject to the aforementioned Card Act provision, as they are able to report the household income as their own income.

("If an applicant resides in a community property state, the applicant's income would generally include the income of the applicant's spouse," reads the applicable provision.)

Stay tuned for more from our San Antonio bankruptcy blog ...

Contact an experienced legal professional to learn more about managing credit card debt/bad credit and fighting creditor harassment.

This post is for informational purposes only and is not to be construed as legal or financial advice.

Source:

The Chicago Tribune, "It's out of the cards for some" Dec. 2, 2011