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myFICO Insider's Guide to 2010 credit card reform and new FHA mortgage rules

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Re: myFICO Insider's Guide to 2010 credit card reform and new FHA mortgage rules

Old post, but I thought I would provide insight as I have noticed confusion in the forums about qualification and income requirements. The Card Act did alter the truth in lending act with a provision called the Ability to Pay Requirement. This means creditors have to compare your individual income (except in the state of WI where household income can be used) to your overall obligations on the CBR. If you get a positive number it means we can approve you for a card or a CLI. No additional documentation is required by the act -- that is for the lender to decide. So be sure to include all sources of income including earned income, rental income, investment income, etc... and if your trying to get away with using household income to qualify just don't say its household income -- otherwise lenders would not be compliant if they use it.


Here is more information on the Ability to Pay otherwise referred to as Regulation Z:

Message 41 of 48
Regular Contributor

Re: myFICO Insider's Guide to 2010 credit card reform and new FHA mortgage rules


Message 42 of 48

Re: myFICO Insider's Guide to 2010 credit card reform and new FHA mortgage rules

I downloaded this file and read through it; this is great information to have!  Thank you for posting it!

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Current Score: 679 as of June 18
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Message 43 of 48
Valued Contributor

Re: myFICO Insider's Guide to 2010 credit card reform and new FHA mortgage rules

This needs to be updated.


The CFPB, which produces the regulations for interpreting Regulation Z, has eliminated the requirement that only individual income is considered and expanded the allowable income rule to include that which a consumer reasonably has access to for those over 21 years of age.


The final rule amends Regulation Z to remove the requirement that issuers

consider the consumer’s independent ability to pay for applicants who are 21 or older, and

permits issuers to consider income and assets to which such consumers have a reasonable

expectation of access.


I have reestablished credit over the last couple years
so my moniker is, well, rather out of date.

WM Discover $1800, WF Plat 12k, Chase Freedom Siggy18k, Amex Plat (60k H/B), Citi AA EWMC 25k
Message 44 of 48
New Visitor

Re: myFICO Insider's Guide to 2010 credit card reform and new FHA mortgage rules

@MarineVietVet wrote:

@rrec33 wrote:

I am unable to download the creditcard Act, but learning about it has been on my list of things to do.


Would someone tell me if this benifits consumers... a brief summary-in lamest terms.


Thank you

I'm sorry you're unable to look at the summary offered by myFICO. Here it is word for word. Follow this link to see the full Credit Card Act 2009.



Significant changes to the terms of your credit card must be given 45 days prior to the change taking affect.

Under current rules, credit card companies only needed to give 15days notice prior to making certain term changes.


Over-limit fees will be prohibited unless you consent to pay for the privilege.


Your credit card bill will now be due on the same calendar day every month.

This means you can schedule payments each month knowing exactly when your bill needs to be paid.


When you open a new account, your interest rate must stay at the opening rate for at least 12 months.

Even if a consumer’s rates are raised after 12 months, the increased rateonly applies to new purchases – not the balance accrued in the first 12 months. There are afew exceptions that allow a rate increase such as a 60-day delinquency on the account, avariable rate, the completion of a workout plan or temporary hardship arrangement, or an expiration of a specified period of time.


Statements must be mailed at least 21 days ahead of when they are due.

This provides you with more time between when you receive your statement and when your bill is due.


If you’re under 21, it will be difficult to open a new credit card account.

You’ll need a co-signer or show proof of income.


You can “opt-out” if you don’t like the terms your credit card companies send you.

Your card may be closed, but you will have multiple options for paying off your balance, including having up to 5 years to pay the card off – under the terms you had before opting out.


Other accounts can’t be used as the basis for raising your interest rate.

This practice known as “universal default”, allowed late payment or defaults on other bills (such as utility bills) to be cause for raising your credit card interest rate even though those other accounts are not related to your credit card account.


Restoring good payment history will lower a raised APR.

If you are reported as delinquent on your credit card payments for 60 days your APR can be increased, but it must return to the old rate if you make 6 consecutive payments thereafter.


Payments go towards higher interest rate balances first.

For example, if you have a cash advance balance in addition to a regular purchase balance, it’s very likely the cash advance has a higher interest rate associated with it. When you pay more than your minimum, the excess amount goes toward paying off that higher interest rate balance before the rest of your balance.


It may be harder for those with bad credit to get credit.

The Federal Reserve openly recognized that these new rules may make it difficult for those with bad credit or limited credit histories to qualify for a new credit card.


Increased protection for gift card holders.

Gift cards now cannot expire for at least 5 years and no inactivity fees can be assessed unless the gift card goes unused for at least 12 months.


With regard to an interest rate being increased due to late payments.... What recourse does a consumer have when the creditor doesn't reduce the rate after 6 consecutive on-time payments.  The reason I am asking is that my mother has had an account with Citibank for close to 30 years, and up until March 2013, was being charged 9.24%.  In Feb 2013 she had some serious medical problems that caused her payment to be late which caused Citi to increase the rate to 28.74.  My mother has been dealing with her health since that time and just recently felt well enough to notice the rate increase.  We called them today and they explained the reason it had gone up, and when I referred to the 6 months of on-time payments the rep was more than happy to lower the rate back down to 9.24 effective immediately.  However, when I asked about my mother getting some sort of credit for the additional 6 months of on-time payments she made at the higher interest rate, we were told that she could not do anything about that.  We asked to be transferred to a supervisor who told us that there was no requirement stating the rate had to be reviewed within a certain time frame, and that they were only required to review the account to see if it was 'eligible' for a rate reduction, and were not required to revert it back to the original rate.  I have read the reform act over and over, and I see tons of rules the credit card companies have to follow, but I see nothing written to indicate any penalites for not following the rules.  So what can consumers do in a situation like this?  Any help or advice is appreciated.

Message 45 of 48
New Visitor

Re: myFICO Insider's Guide to 2010 credit card reform and new FHA mortgage rules


Message 46 of 48
New Contributor

Re: myFICO Insider's Guide to 2010 credit card reform and new FHA mortgage rules

Excellent information; thank you!

February 2022: 832 (Experian FICO 9) 820 (Equifax FICO 9)
Message 47 of 48
Established Member

Re: myFICO Insider's Guide to 2010 credit card reform and new FHA mortgage rules

Are there any updates for 2021?

Message 48 of 48
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