As part of the CARD Act signed into law by Congress, a new requirement put in place may make it more difficult for a minority group to access credit. Previously, credit card companies were allowed to ask for household income for applicants.
Now, after a rule change, credit card companies ask consumers about their own individual income. Without sufficient income, those who do not derive income outside the home are limited in their choices for credit cards. A stay-at-home mother who is part of a family with $100,000 in income, for example, could not claim any earnings on her credit card application. By law, such an application would have to be denied, despite an income greater than the American median household income.
Restrictive Policies
Consumer advocates claim that the law is unnecessarily tough for consumers. Credit cards are a key part of credit scoring models, and may substantially impact someone's credit score. Previously, the law was written to impact only those under 21 years old. The idea is that credit cards would be marked less to younger adults and college students who had not yet established themselves in a career.
Should the law be overturned, it will be the first major change to the CARD Act as written. So far, the public perception of the CARD Act has been positive. However, this could be a major roadblock in rolling out new regulations on credit card use. Limited access to credit could significantly reduce a family's ability to finance a major purchase in the future.
In the first few years after its 2009 passage, it appears that laws designed to help debtors pay off credit card debts have done just that. Credit card debt is down considerably from the peak of nearly $1 trillion in 2008 and 2009.