Today, NAFCU’s compliance blog explains the CFPB’s final Credit Card Accountability Responsibility and Disclosure Act rule and which factors credit unions must consider when evaluating a consumer’s ability to pay.
Because of this rule, a credit card issuer is permitted to deem a stay-at-home credit applicant who is 21 years or older as qualified based on income and assets shared with a spouse or partner. NAFCU advocated strongly that this option, eliminated when the CARD Act rule was in Federal Reserve hands, be reinstated, and the CFPB restored it earlier this year. Bernadette Clair, NAFCU’s regulatory compliance counsel, says the final rule provides flexibility.
“Under the CFPB’s final rule, card issuers can choose to establish lending policies and procedures that consider income and assets to which a consumer age 21 and over has a reasonable expectation of access, OR they can choose to limit consideration of a consumer’s income or assets to the consumer’s independent income and assets.”
Though credit unions don’t have to take into account a consumer’s reasonable expectation of access to income and assets, Clair said not doing so has implications. “One issue to consider . . . is whether choosing to exclude this type of income will leave your credit union at a competitive disadvantage compared to other lenders.”continue reading »