By: Kari Michel
On March 18th 2011 the Federal Reserve Board approved a rule amending Regulation Z (Truth in Lending) to clarify portions of the final rules implementing the Credit CARD Act of 2009.
Specific to ability to pay requirements, the new rule states that credit card applications generally cannot request a consumer’s “household income” because that term is too vague to allow issuers to properly evaluate the consumer’s ability to pay. Instead, issuers must consider the consumer’s individual income or salary. The new ruling will be effective October 2011.
Given the new direction outlined in the latest rules, we’ve been hard at work on developing 2 income models to support these regulatory obligations and enhance the underwriting and risk assessment process – Income InsightSM and Income Insight W2SM. Both income models estimate an individual’s income based on an individual credit report and can be used in acquisition strategies, account management review and collection processes. Why two models? Income InsightSM estimates the consumer’s total income, including wages, investments, rentals and other income. Income Insight W2SM estimates wages only.
Check them out – and let us know what you think! We want to hear from you.