| ***facts*** | for Consumers |
|-------------|---------------|

----

**Federal Trade CommissionJanuary 1993**

----

Credit and Older Americans***fast facts***

| - Under the federal Equal Opportunity Act (ECOA),                it is against the law for a creditor to deny you                credit or terminate existing credit simply                because of your age.     
- When you apply for credit, creditors who consider                income must consider not only salary from a job,                but also income from Social Security, pensions,                and other retirement benefits.     
- Under the ECOA, a creditor cannot automatically                close or change the terms of a  joint                 account solely because of the death of your                spouse.     
- If you are concerned about your credit status if                your spouse should die, you may want to open an                account in your own name. |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Bureau of Consumer Protection Office        of Consumer & Business Education        (202) 326-3650 |
|--------------------------------------------------------------------------------------------------------|

*Prepared in cooperation with the AmericanAssociation of Retired Persons*

Securing credit is as important forolder Americans as it is for younger. Yet, older consumers andparticularly older women may find they have special problems withcredit. For example, if you have paid with cash all your life, you mayfind it difficult to open a credit account, because you have"no credit history" (i.e., no history of how you paidfor credit). If you now are living on a lower salary or pension,you may find it harder to obtain a loan because you have"insufficient income." Or, if your spouse dies, you mayfind that creditors try to close accounts that you and yourspouse once shared. Under the federal Equal Credit Opportunity Act (ECOA), it isagainst the law for a creditor to deny you credit or terminateexisting credit simply because of your age. This brochure willhelp you learn what rights you have. 

## Applying for Credit

Applying for credit used to mean asking a neighborhood bankeror tradesperson for a loan. Now, with national credit cards andcomputerized applications, the day of personal evaluations may beover. Instead, computer evaluations look at, among other things,your income, your past payment records, your credit cards, andyour outstanding balances. Paying in cash and in full may besound financial advice, but they will not give you a history onwhich to get credit. When you apply for credit or a loan, one major indicator of yourability to repay is your current income. If you are retired oremployed part-time, this may be of some concern. But creditorswho consider income must consider types of income that are likelyto be received by older Americans. These include not only salaryfrom a job, but also from Social Security, pensions, and otherretirement benefits. In addition, you may want to inform creditors about other assetsor sources of income, such as your home, other real estate,savings and checking accounts, money market funds, certificatesof deposit, and stocks and bonds. If you are 62 or over, you have certain other protections whenyou apply for credit. You cannot be denied credit because of yourage or the fact that you cannot obtain credit-related insurancebecause of your age. Credit-related insurance pays off thecreditor if you should die or become disabled. However, a creditor can consider your age to: * favor applicants who are 62 or over. * determine other elements of creditworthiness. (For example, acreditor could use your age to see if your income might changebecause you are at the age of retirement.) 

## Checking Your Credit History

When you apply for credit, a creditor will often check yourcredit history by contacting a credit bureau. If you want to knowwhat is in your credit file, contact the local credit bureausthat have your file. (Credit bureaus can be found in the YellowPages under headings such as "Credit" or "CreditRating and Reporting Agencies.") They will tell you whatinformation is in your file and may give you a copy of yourcredit report. Credit bureaus may charge a small fee for this(unless you have been denied credit based on your credit report).You may find that your credit file does not list all of yourcredit accounts. This is because not all creditors report tocredit bureaus. You can request, however, that additionalaccounts be reported to your file. Credit bureaus, though, maycharge for this service. If you move, request that the credit bureau in your new locationtransfer your credit file from your previous location. Mostcredit bureaus are willing to share this information. Credit information about shared accounts should be reported inyour name and in your spouse's. If it is not, you can write tothe creditor and request that the account be reported in bothnames. 

## Establishing a Credit History

If you are denied a loan or credit card because you have nocredit history, you may want to establish one. The best way to dothis is to borrow money or use a credit card and make paymentsregularly. For example, you could apply for a small line ofcredit from your bank or for a credit card from a localdepartment store. Local creditors that you know usually are moreinclined to give you credit. Of course, you will want to give these creditors your bestfinancial references. And, make sure the creditor you open anaccount with reports your credit history to a credit bureau; notall do. 

## If a Spouse Should Die

Under the ECOA, a creditor cannot automatically close orchange the terms of a joint account solely because of the deathof your spouse. (A "joint account" is one for whichboth spouses applied and signed the credit agreement.) In someinstances though, a creditor may ask you to update yourapplication or reapply. This can happen if the initial acceptancewas based on all or part of your spouse's income and if thecreditor has reason to suspect your income is inadequate tosupport the credit line. After you submit a re-application, the creditor will determinewhether to continue to extend you credit or change your creditlimits. While your application is being reviewed, the creditormust let you use the account without new restrictions. Within 30days of receiving a completed application, the creditor must giveyou a written response on your application. If your applicationis turned down, you must be given specific reasons for denial. All these protections regarding closing or changing the terms ofan account also apply when you retire, reach a certain age, orchange your name or marital status. 

## Kinds of Accounts 

To ensure that you are protected if a spouse should die, it isimportant to know what kind of credit accounts you have. Forexample, there are three basic kinds of credit accounts. Theyare: * An individual account, where the charge is opened in oneperson's name and is based only on that person's income andassets. * A joint account, where the charge is opened in two people'snames, often a husband and wife, and is based on the income andassets from both or either person, and where both people arecontractually liable for any debts because they signed the creditapplication. * A user account, where two people's name may appear on a chargecard, but the account is based on the income and assets of justone of those people, who also is the only one legally responsiblefor any debts. If you and your spouse share a credit account, only a jointaccount gives you the protections against closing the accountshould your spouse die; a user account does not. If you combineyour own and your spouse's financial resources to apply for acredit account, make sure you are opening a joint account and nota user account, where your name simply appears on the creditcard. To find out what kind of account you have, check the applicationto see if you applied for credit as "joint applicants"or ask your creditor. That way, your credit status would beprotected in the event of your spouse's death. If you are concerned about your credit status if your spouseshould die, you may want to try -- if you have enough income andassets on your own -- to open one or more individual accounts inyour own name. In that way, your credit status would remainunaffected in the event of your spouse's death. When you are applying for individual credit, you should ask thecreditor to consider the credit history of accounts that arereported in your spouse's or former spouse's name only, as wellas those that are in your name. The creditor must consider thisinformation if you can show that it reflects on your ability tomanage credit. For example, you may be able to show throughcancelled checks that you made payments on an account, eventhough it is listed in your spouse's name only. 

## If You Are Denied Credit

While the ECOA gives you certain rights, it does not guaranteethat you will be granted credit. Creditors are the ones who makethat decision. But if you are ever denied credit, first make sureyou request the reasons for the denial. It may have been an erroror the computer system may not have evaluated all relevantinformation. In that case, you can ask the creditor toreconsider. You might be able to negotiate a compromise with the creditor.If, for example, at the age of 70, you apply for a 30-yearmortgage, a lender might be concerned about your ability to repaythe loan. However, if you applied for a 15-year mortgage,increased your downpayment, or did both, you might satisfy thecreditor's concerns. If you believe you have been discriminated against, however, youmay want to write to the federal agency that regulates thatparticular creditor. You should be able to find the name andaddress of this federal agency in the letter turning down yourrequest for credit. If you do write, try to include all the facts -- including anyoral statements or discussions. Keep copies of all documents andsubmit this information along with a letter of explanation to theappropriate federal agency or, if you wish, to an attorney. Youhave the right to sue a creditor who violates the ECOA. 

## For More Information 

If you have questions about the Equal Credit Opportunity Actor your credit rights, write to: Correspondence Branch, FederalTrade Commission, Washington, D.C. 20580. Although the FTCgenerally does not intervene in individual disputes, theinformation you provide may indicate a pattern of practicesrequiring action by the Commission. In addition, the FTC provides other credit publications: *EqualCredit Opportunity; Fair Credit Reporting; and Women and CreditHistories.* For a single free copy, write to: PublicReference, Federal Trade Commission, Washington, D.C. 20580. 6/87