Credit is a necessary and very important money management tool for both older and young consumers. However the elderly, especially older women, may find it hard to get
credit. If you are a consumer, that is older, who has been paying with cash for most of your life, you may find it extremely difficult and frustrating to open a credit account. This is because you
probable 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 income that is insufficient. You may find creditors
trying to close joint accounts, if your spouse dies. A joint account is one for which both spouses applied and signed the agreement for credit. You should be aware that under the federal Equal Credit
Opportunity Act (ECOA), it is against the law for a creditor to terminate existing credit or deny you credit simply because of your age.
Applying for credit used to mean asking your neighborhood or local banker for a loan. In today's world, with computerized applications and national credit cards, the day of personal evaluations may be over. Instead, computer evaluations look at, among other things, payment history, your income, outstanding balances, and credit card accounts. Paying in full and with cash maybe 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 on a credit card or 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 pensions, Social Security, salaries from part-time employment, 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, checking accounts and savings, certificates of deposit, money market funds, stocks and bonds.
If you are the 62 years old 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 become disabled or should die. 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 are 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 increase your down payment, apply for a shorter loan term, or do both, you might satisfy the creditor's concerns.
The Equal Credit Opportunity Act 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 the information that is relevant. 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 Equal Credit Opportunity Act.
You may want to also read Credit If Your Spouse Dies
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