Utility Credit
Of all the many different
types of credit - for example, retail credit,
loans, charge cards, and mortgages - utility
credit may be the one that most people cannot
do without. Utility credit is the credit
extended to users of gas, electricity, and
water services. Phone
service also can be considered a utility.
Having an account with
a utility provider is a lot like having
any other credit account: You get service
now and pay for it later. And, like other
creditors, utility companies keep a record
of your payment patterns. This record becomes
your utility credit history. It's important
to have a good utility credit history because
it becomes part of your entire credit history,
which often is a determining factor in your
ability to get credit - including utility
services - and sometimes even a job, in
the future.
To ensure fairness, federal
law prohibits utility and other companies
from engaging in discriminatory practices.
Specifically, under the Equal Credit Opportunity
Act (ECOA), these companies cannot discriminate
against consumers on the basis of sex, marital
status, race, national origin, religion,
or age. They also cannot discriminate against
people who receive public assistance.
Here's a look at how the
law works when it comes to utility services:
Deposits
Utility companies frequently
require new customers to make a deposit
or get a letter of guarantee from a person
who agrees to pay the bill if the customer
does not. Under the law, requiring only
some customers to pay a deposit or get a
letter of guarantee is offering them credit
on less favorable terms. If done on a discriminatory
basis, it is illegal.
The utility company generally
can require you to make a deposit or obtain
a letter of guarantee if you are a new customer
and all new customers are required to pay
a deposit, or if you have a bad utility
credit history.
The utility company cannot
require you to pay a deposit because any
previous utility services you received were
under your spouse's name and not yours.
If you can show that you had utility service
in a spouse's name, the utility company
must consider the utility credit history
yours. If you share your spouse's utility
credit history, it could be unlawful for
the utility company to require you - but
not your spouse - to pay a deposit.
Determining Your Credit
History
What if your spouse had
a bad utility credit history? Could that
reflect on you? In some circumstances, it
could.
If your spouse's credit
history is bad, the utility company could
consider that credit history yours and ask
you to pay a deposit or get a letter of
guarantee. However, the ECOA gives consumers
the opportunity to prove that their spouse's
bad credit history does not reflect their
own unwillingness or inability to pay.
For example, if you were
seeking utility services in your own name
but your bad credit history reflects your
former spouse's credit practices, not yours,
the utility company would have to consider
any evidence you provide that you were not
part of your former spouse's bad credit
practices. That might include information
demonstrating that you did not live with
the spouse when the account was overdue,
that you never saw the bills, or that you
paid the bills once you discovered they
were overdue.
However, your spouse's
utility credit history can be considered
yours if your spouse lived with you or you
benefited from using the account. If you
live in a community property state, the
utility company can consider any information
about your spouse that it can consider about
you when determining your credit history
- even if you were not living together and
did not share the account while it was open.
To learn whether you live in a community
property state, check with your state consumer
protection agency.
If you cannot convince
the utility company that the bad credit
history is not yours, you may have to pay
a deposit or get a letter of guarantee.
Or, you may be asked to pay your spouse's
old debts before your service is connected.
In the latter case, the company's right
to take such action is governed by state
law, not the ECOA. Contact your city or
county consumer protection office for more
information.
Get It In Writing
If you are denied utility
credit (or any credit) or offered less favorable
credit terms than you applied for and you
reject the offer, you have the right to
know the reasons for the company's action.
If your application is denied, or if you
reject the company's offer of less favorable
terms, the company must send you a notice
stating either the specific reasons for
the action or stating your right to get
the reasons within 30 days (if you make
your request within 60 days of the company's
notice to you). Always put your request
in writing.
Learning the reason may
help you become more creditworthy, correct
errors, or detect unlawful discrimination.
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