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.
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:
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
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
If Your Spouse
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.
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.
If You're Denied
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.
Comptroller of the Currency
State Member Banks of the Reserve System
Consumer and Community Affairs
Federal Credit Unions
National Credit Union
Non-Member Federally Insured Banks
Office of Consumer Programs
Federally Insured Savings and Loans, and Federally Chartered State Banks
Consumer Affairs Program
(includes retail, gasoline, finance, and mortgage companies)
Consumer Response Center