Getting Credit
When You're Over 62
Credit is an important money management tool for both young and
older consumers. Yet the elderly, particularly older women, may find it difficult to get
credit.
If you're an older consumer who has paid with cash all
your life, you may find it difficult to open a credit account. That's because you have
"no credit history" of how you paid on credit. If your income has decreased, you
may find it harder to get a loan because you have "insufficient income." Or, if
your spouse dies, you may find creditors trying to close joint accounts. A "joint
account" is one for which both spouses applied and signed the credit agreement.
Under the federal Equal Credit Opportunity Act (ECOA),
it's against the law for a creditor to deny you credit or terminate existing credit simply
because of your age. This brochure explains your rights and offers tips for applying for
and maintaining credit.
Applying for Credit
Applying for credit used to mean asking your
neighborhood banker for a loan. Now, with national credit cards and computerized
applications, the day of personal evaluations may be over. Instead, computer evaluations
look at, among other things, your income, payment history, credit card accounts, and any
outstanding balances. Paying in cash and in full may be sound financial advice, but they
won't give you a payment history that helps you get credit.
A major indicator of your ability to repay a loan is your
current income. Those who consider income must include types of income that are likely to
be received by older consumers. This includes salaries from part-time employment, Social
Security, pensions, and other retirement benefits.
You also may want to tell creditors about assets or other
sources of income, such as your home, additional real estate, savings and checking
accounts, money market funds, certificates of deposit, and stocks and bonds.
If you're age 62 or over, you have certain other
protections. You can't be denied credit because credit-related insurance is not available
based on your age. Credit insurance pays off the creditor if you should die or become
disabled.
On the other hand, a creditor can consider your age to:
- favor applicants who are age 62 or older.
- determine other elements of creditworthiness. For example,
a creditor could consider whether you're close to retirement age and a lower income.
While a creditor cannot take your age directly into
account, a creditor may consider age as it relates to certain elements of
creditworthiness. If, for example, at the age of 70, you apply for a 30-year mortgage, a
lender might be concerned that you may not live to repay the loan. However, if you apply
for a shorter loan term, increase your down payment, or do both, you might satisfy the
creditor's concerns.
Checking Your Credit History
A creditor will often check your credit history with a
credit bureau. If you want to know what's in your credit file, contact the credit bureaus
listed in the Yellow Pages under "credit" or "credit rating and
reporting." Because more than one bureau may have a file on you, call each until you
locate all the agencies maintaining your file. The three major national credit bureaus
are:
- Equifax, P.O. Box 740241, Atlanta, GA 30374-0241; (800)
685-1111
- Experian (formerly TRW), P.O. Box 2104, Allen, TX 75013;
(888)
EXPERIAN (397-3742).
- Trans Union, P.O. Box 1000, Chester, PA 19022; (800)
916-8800.
There's no charge for your report if a company takes
adverse action against you based on your credit report such as denying your
application for credit, insurance, employment, or rental housing and your request your
report within 60 days of receiving the notice of the action. The notice will give you the
name, address, and phone number of the credit bureau that supplied the information. In
addition, you're entitled to one free report a year if you can prove that (1) you're
unemployed and plan to look for a job within 60 days, (2) you're on welfare, or (3) your
report is inaccurate because of fraud. Otherwise, a credit bureau may charge you up to $8
for a copy of your report.
You may find that your file doesn't list all of your
credit accounts. That's because not all creditors report to credit bureaus. You may ask
that additional accounts be reported to your file. Some bureaus may charge for this
service.
Credit information about shared accounts should be
reported in your name and your spouse's. If it's not, ask the creditor in writing to
report the account in both names.
Establishing a Credit History
If you're denied a loan or credit card because you
have no credit history, consider establishing one. The best way is to apply for a small
line of credit from your bank or a credit card from a local department store. Make sure
you list your best financial references. Make payments regularly and make certain the
creditor reports your credit history to a credit bureau.
If Your Spouse Dies
Under the ECOA, a creditor cannot automatically close
or change the terms of a joint account solely because of the death of your spouse. A
creditor may ask you to update your application or reapply. This can happen if the account
was originally based on all or part of your spouses income and if the creditor has
reason to believe your income alone cannot support the credit line.
After you submit a re-application, the creditor will
determine whether to continue to extend you credit or change your credit limits. Your
creditor must respond in writing within 30 days of receiving your application. During that
time, you can continue to use your account with no new restrictions. If you're application
is rejected, you must be given specific reasons, or told of your right to get this
information.
These protections also apply when you retire, reach age 62
or older, or change your name or marital status.
Kinds of Accounts
It's important to know what kind of credit accounts
you have, especially if your spouse dies. There are two types of accounts
individual and joint. You can permit authorized persons to use either type.
- An individual account is opened in one person's name
and is based only on that person's income and assets.
If you're concerned about your credit status if your
spouse should die, you may want to try to open one or more individual accounts in your
name. That way, your credit status won't be affected.
When you're applying for individual credit, ask the
creditor to consider the credit history of accounts reported in your spouse's or former
spouse's name, as well as those reported in your name. The creditor must consider this
information if you can prove it reflects positively and accurately on your ability to
manage credit. For example, you may be able to show through canceled checks that you made
payments on an account, even though it's listed in your spouse's name only.
- A joint account is opened in two people's names,
often a husband and wife, and is based on the income and assets of both or either person.
Both people are responsible for the debt.
Account "Users"
If you open an individual account, you may authorize
another person to use it. If you name your spouse as the authorized user, a creditor who
reports the credit history to a credit bureau must report it in your spouse's name as well
as in yours (if the account was opened after June 1, 1977). A creditor also may report the
credit history in the name of any other authorized user.
If You're Denied Credit
The ECOA does not guarantee you'll get credit. But if
you're denied credit, you have the right to know why. There may be an error or the
computer system may not have evaluated all relevant information. In that case, you can ask
the creditor to reconsider your application.
If you believe you've been discriminated against, you may
want to write to the federal agency that regulates that particular creditor. Your
complaint letter should state the facts. Send it, along with copies (NOT originals) of
supporting documents. You also may want to contact an attorney. You have the right to sue
a creditor who violates the ECOA.
National Banks
Comptroller of the Currency
Compliance Management, Mail Stop 7-5
Washington, D.C. 20219
State Member Banks of the Reserve System
Consumer and Community Affairs
Federal Reserve Board
20th & C Sts., N.W.
Washington, D.C. 20551
Federal Credit Unions
National Credit Union Administration
1776 G St., N.W.
Washington, D.C. 20456
Non-Member Federally Insured Banks
Office of Consumer Programs
Federal Deposit Insurance Corporation
550 Seventeenth St., N.W.
Washington, D.C. 20429
Federally Insured Savings and Loans, and Federally
Chartered State Banks
Consumer Affairs Program
Office of Thrift Supervision
1700 G St., N.W.
Washington, D.C. 20552
Other Creditors
(includes retail, gasoline, finance, and mortgage
companies)
Consumer Response Center
Federal Trade Commission
Washington, D.C. 20580
For More Information
The FTC works for the consumer to
prevent fraudulent, deceptive and unfair business practices in the
marketplace and to provide information to help consumers spot, stop and
avoid them. To file a
complaint or to get free information
on consumer issues, visit
www.ftc.gov or
call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The
FTC enters Internet, telemarketing, identity theft and other fraud-related
complaints into
Consumer Sentinel, a
secure, online database available to hundreds of civil and criminal law
enforcement agencies in the U.S. and abroad.
|
FEDERAL TRADE COMMISSION |
FOR THE CONSUMER |
1-877-FTC-HELP |
www.ftc.gov |
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November 1998 |