Credit is a very 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 are a older consumer who has paid with cash all your life, you may find it difficult to open a credit account. That is 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. 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 is against the law for a creditor to deny you credit or terminate
existing credit simply because of your age.
Applying for credit used to mean asking your local or 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 will not 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 are the age 62 or over, you have certain other protections. You cannot 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. They may also 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.
The ECOA does not guarantee you will get credit, but if you are 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 have 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.
You may want to also read Credit If Your Spouse Dies