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Changes Affecting Your Credit Report

Credit bureaus are taking new sources of income, bill paying into consideration

3. The credit industry is becoming better regulated

Some changes that will affect you greatly don't apply to you directly, but rather to the credit reporting industry. One of those changes became effective Sept. 30, 2012.

Since then, dozens of credit reporting firms — including the "Big 3," Equifax, Experian and TransUnion — have been monitored by the newly established federal watchdog agency, the Consumer Financial Protection Bureau, or CFPB.

The CFPB can now monitor their business practices, conduct on-site examinations and write new rules concerning how they operate.

The idea is to make sure that agencies that hold so much sway over Americans' financial lives are treating consumers fairly. Some experts expect that the CFPB will demand changes that will make mistakes on your credit report easier to fix.

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

If you've recently retired, gone through a divorce or been widowed, and then applied for credit on your own, you may have been rejected because of "insufficient income."

That's because in October 2011, a provision of the Credit Card Act of 2009 took effect making it tougher for nonworking spouses, ex-spouses or widows and people with limited incomes to qualify for credit on their own.

Under the new law, credit card firms are prohibited from basing credit decisions on a person's overall household income. Instead, they must evaluate only the individual 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 obtained cards — not, say, students who didn't even have jobs. But the law has wound 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's an unfortunate catch-22 of the system that having no credit history is often deemed just as bad as having a history that's bad.

So this section of the Card Act has been revisited. Testifying in September 2012 before the House Financial Services Committee, CFPB Director Richard Cordray said his agency would use its rule-making authority to correct what he called "clearly an unintended consequence."

The fix should happen in early 2013.

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

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