Years ago the Fed realized that many stay at home spouses (mostly women) were harmed, through death or divorce of their spouse, by not having credit in their own names. While the stay at home spouse could receive credit as being joint on their spouses account the Fed realized that the opportunity for the stay at home spouse to gain credit was based on the whim of the working spouse.
Under Regulation Z of the TILA (Truth in Lending Act) household income was originally for the stay at home spouse so that they could use the income of their working spouse to gain credit in their name only and not as a joint account.
Since it was written in very vague terms, at first the creditors also allowed of age children to use their parents income if they lived in the same household as their parent(s). Eventually the creditors ran with it and basically considered the term household income as meaning the income of "anyone" in the household of legal age ..... parents, of age children, siblings, roommates, etc., etc.
Earlier this year the Fed approved a rule to amend Regulation Z so that only the personal income of the applicant can be used. The new law will be in effect by October of this year but some creditors have already been changing the wording on their applications.
While this new rule is good in some respects, by keeping people from putting in the income of anyone and everyone of legal age who lives in the household, it will harm those that the Fed originally intended to help through the old law.