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| Getting Credit After 62 |
| the Federal Trade Commission |
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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 (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.
Applying for Credit
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
- Your outstanding balances
Paying in cash and in full may be sound financial advice, but 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, such as:
- Salaries from part-time employment
- Social Security
- Pensions
- Other retirement benefits
You may also 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 just because credit-related insurance isn't 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, you apply for a 30-year mortgage at the age of 70, 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.
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 you 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:
- You're unemployed and plan to look for a job within 60 days
- You're on public assistance, or
- 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.
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 spouse's 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 your 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 Denied Credit
The ECOA doesn't 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. |
