Mature consumers may struggle to get credit

Elderly, particularly older women, may find it difficult to get financial credit.

It’s undeniable that credit is important in today’s world. Older consumers may have particular challenges with their credit. Mature adults, particularly older women, may find it especially difficult to get credit. Older consumers who have generally paid with cash all their lives may find it difficult to open a credit account. With “no credit history,” creditors may be unwilling to extend credit to a mature individual. In addition, if a person’s income has decreased, it may be harder to get a loan because of “insufficient income.” Or, if a spouse dies, creditors may try to closejoint accounts. Under the Federal Equal Credit Opportunity Act (ECOA), it’s against the law for a creditor to deny a person credit or terminate existing credit simply because of age.

Applying for credit
In the past, applying for credit might have meant asking a neighborhood banker for a loan. Now, with national credit cards and computerized applications, having a relationship with a financial services provider that evaluates your credit worthiness may be over. The Federal Trade Commission (FTC) tell us that instead, computer evaluations look at things like income, payment history, credit card accounts and any outstanding balances. Paying in cash and in-full may be sound financial advice, but that doesn’t give a person a payment history that helps him/her get credit. Current income is the major factor that indicates a person’s ability to repay a loan. So older consumers will have creditors looking at types of income that are likely to be earned or received by older consumers. This includes salaries from part-time employment, Social Security, pensions and other retirement benefits. The FTC tells us that if a person is age 62 or over, he/she has certain protections. Mature consumers can’t be denied credit because credit-related insurance is not available based on your age.

If your spouse dies
The FTC reports that under the Equal Credit Opportunity Act (ECOA), a creditor cannot automatically close or change the terms of a joint account solely because of the death of a spouse. A creditor may ask to update the application or have the person reapply. This can happen if the account was originally based on all or part of a spouse’s income and if the creditor has reason to believe the survivor’s income alone cannot support the credit line. After a re-application is submitted, the creditor will determine whether to continue to extend credit or change the credit limits. Creditors must respond in writing within 30 days of receiving an application. During that time, consumers can continue to use their account with no new restrictions. If the new application is rejected, the applicant must be given specific reasons or told of his/her right to get this information. These protections also apply when a person retires, reaches age 62 or older or changes his/her name or marital status.

For more information
The FTC works to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or get free information on consumer issues, visit the FTC website or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261.

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