Changes to credit reports that could affect your credit score


4. You may have trouble getting a credit card on your own

If you’ve recently retired, divorced, or widowed, and then applied for credit on your own, you may have been rejected because of “insufficient income”.

Indeed, in October 2011, a provision of the Credit Cards Act 2009 entered into force, making it more difficult for non-working spouses, ex-spouses or widows and people with limited incomes to qualify for a credit by themselves.

Under the new law, credit card companies are prohibited from basing their credit decisions on a person’s overall household income. Instead, they should assess only the person applying. So if you can’t show enough of your own income, you may not be able to get a new credit card or even a higher credit limit on an existing card.

This new rule was supposed to reduce risk in the marketplace and help ensure that only truly “qualified” people get cards – not, say, students who didn’t even have a job. But the law ended up causing hundreds of thousands of people to be deemed unworthy of credit. It has hurt older Americans, widows, stay-at-home parents, and spouses of all ages. It is an unfortunate trap of the system that having no credit history is often considered just as bad as having a bad history.

This section of the Cards Act has therefore been revised. Testifying in September 2012 before the House Financial Services Committee, CFPB Director Richard Cordray said his agency would use its regulatory power to correct what he called “clearly an unintended consequence.”

The corrective action should take place in early 2013.

Lynnette Khalfani Cox, The Money Coach (R), is a personal finance expert, TV and radio personality, and regular contributor to AARP. You can follow her on Twitter and on Facebook.

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