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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:
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:
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.
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.
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
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