Facts for Consumers from the Federal Trade Commission

Women and Credit Histories -- October 1993

*	Mrs. Becker had been using her husband's department store 
charge card for several years. The charges were billed to her 
husband, but she took responsibility for paying the bills on 
time. Recently, she applied for her own credit card from the 
store and her application was denied. The reason? The store had 
no record of her bill-paying history on her husband's account.

*	Louise Martin changed her name when she got divorced. 
Although she had several successful credit accounts in her 
married name, her applications for credit in her maiden name were 
repeatedly denied. Creditors told her: "We cannot find a record 
of your credit history under the name you gave on your 
application form."

*	Bess Fenton, a young single woman, recently moved to the 
West Coast to start a new job. She applied for her first credit 
card with a national oil company, but since she had no record 
with the local credit bureau, her application was denied. Her 
question: "If it takes credit to get credit, how do I begin?"

You may have faced similar problems when you have applied for 
credit. Each year, many women are denied credit because they 
cannot show how they have used it. A good credit history is the 
way most companies predict your future success using credit. The 
record of your payment on credit cards, charge accounts, 
installment loans, and other credit accounts is how you get a 
"track record." It gives a creditor evidence that you are a good 
credit risk.

Know Your Rights Under The Law

Two federal laws give you specific rights that help protect your 
credit history and make it easier for you to obtain credit:

l	The Equal Credit Opportunity Act (ECOA) prohibits a creditor 
from discriminating against you on the basis of sex or marital 
status in any aspect of a credit transaction. The ECOA also 
forbids discrimination on the basis of your race, color, age, 
national origin, religion, because you receive public assistance 
payments, or because you exercised rights under the federal 
consumer credit protection laws.

l	The Fair Credit Reporting Act (FCRA) protects consumer 
privacy and safeguards the accuracy of credit bureau reports.

Ask The Credit Bureau To Help

Credit bureaus gather and sell credit information about consumers 
and are a principal source of information about your credit 
history. Creditors usually rely on credit bureau reports before 
issuing a line of credit. So it makes sense to ask your local 
credit bureaus for your report. You can find them listed in the 
telephone Yellow Pages under "Credit Bureaus" or "Credit 
Reporting Agencies." The bureaus will report whatever they have 
on file, which might include what kinds of credit accounts you 
have, how punctually you pay your bills, and whether you have 
ever filed for bankruptcy or were sued. The report may include 
other credit references that you can use in new credit 
applications to give a more complete picture of your financial 
situation.

Some credit references may not appear in your file simply because 
the creditor may not report the information to the credit 
bureaus. Credit bureaus obtain most of their information from 
those creditors who send them monthly reports. Some creditors 
only report delinquent accounts; accounts with good payment 
histories may go unreported. Most major national credit card 
companies report their accounts to credit bureaus, but many local 
creditors do not.

Fill An Empty Credit File

If creditors have failed to supply information to your credit 
file, or if you have never had credit in your own name, a "no 
file" report can cause your application to be rejected.
For example, if you become separated, divorced, or widowed, or 
simply want credit in your own name, a credit bureau may report 
"no file" exists for you. You might have a great credit history, 
but all in your husband's name. You may have the same problem 
when you marry and change your name.  Old accounts held in your 
maiden name may not automatically be transferred to a file listed 
under your married name. For all practical purposes your credit 
history is lost. Therefore, it is important to check with the 
credit bureau after a name change to ensure that old account 
information has transferred to a file under your new name.

For your own protection you should learn how to prevent credit 
history "evaporation." There are steps you can take to fill an 
empty file with your past credit history or to build the file 
with new information.

Kinds of Accounts

To ensure that you are protected should you become separated, 
divorced, or widowed, find out now what kind of credit accounts 
you have. You can either check the application(s) or ask your 
creditor(s). There are two basic kinds of credit accounts.
 

l	An individual account.  When  you apply for an individual 
account, only your own income, assets, and credit history are 
considered by the creditor. Whether married or single, you alone 
are responsible for paying off the debt on this account. The  
account will appear on the individual's credit report.

l	A joint account.  The income, financial assets, and credit 
history of both spouses are taken into consideration for a joint 
account. No matter who actually handles the household bills, both 
spouses are responsible for seeing that all debts are paid. A 
creditor who reports the credit history of a joint account to 
credit bureaus must report it in both names (if the account was 
opened after June 1, 1977).

If you are separating from or divorcing your spouse, you should 
immediately cancel your joint credit card account(s). While any 
account balance remains your mutual responsibility, canceling the 
account(s) will prevent further use or abuse of the card(s) that, 
if left unpaid, could damage both of your credit reports. 

Under the ECOA, a creditor cannot automatically close or change 
the terms of a joint credit card account solely because of the 
death of your spouse. However, in some instances a creditor may 
ask you to update your application or reapply. This can happen if 
the account was initially granted based on all or part of your 
spouse's income and if the creditor has reason to suspect your 
income is inadequate to support the credit line.

Build Your Credit File

l	If you have never had credit, start building a good record 
now. A local bank or department store may approve your credit 
application even if you do not meet the standards of large 
creditors. But do not apply for too many accounts at one time. 
Credit bureaus keep a record of each creditor who inquires about 
you. Some creditors may deny your application if they think you 
are trying to open too many accounts and may exceed your ability 
to pay them.

l	If you have had credit before under a different name or in a 
different location, make sure your local credit bureau has 
complete and accurate information about you in a file under your 
current name. Most cities have two or three bureaus. Call each 
bureau to find out if they have a file on you. They may charge a 
small fee for checking your file.

l	If you are married, know that you have the right to apply 
for a credit account in your own name based on your own financial 
qualifications.

l	If you were married or divorced recently and changed your 
name, ask your creditors to change your name on your accounts. 
Once you verify that these accounts are in your new name, your 
complete credit history should be reported correctly to the 
credit bureau.

Give Your Best Credit References

List your best credit accounts, open and closed, on any credit 
application _ including accounts you shared with your husband or 
former husband. 

Also ask the creditor to consider the credit history of accounts 
that are reported in your husband's or former husband's name 
only. The creditor must consider this information if you can show 
it reflects your ability to manage credit. For example, you may 
be able to show through cancelled checks that you made payments 
on an account, even though it is listed in your husband's or 
former husband's name only. 

Offer to assist the creditor in providing verification of your 
credit references when an account history does not appear in a 
credit bureau report. If you can show a credit history applied to 
you, even though it was in your husband's or former husband's 
name, the creditor must consider it. Be aware, however, that if 
your husband's credit history on a shared account was bad, the 
company will consider that credit history yours as well. If any 
previous history was unfavorable but does not accurately reflect 
your creditworthiness, explain this to the creditor.

Credit History For Married People

The ECOA states that when creditors report histories to credit 
bureaus or to other creditors, they must report information on 
accounts shared by married couples in both names. This is true 
only for accounts opened after June 1, 1977. If you and your 
spouse opened an account before that time, ask the creditor to 
use both names. 

Ask Questions If Your Application Is Denied

The ECOA gives you the right to know the specific reasons for 
denial if you receive a notice that your credit application was 
denied. If the denial was based on a credit report, you are 
entitled to know the specific information in the credit report 
that led to the denial. After you receive this information from 
the creditor, you should visit or telephone the local credit 
bureau to find out what information was reported. The bureau 
cannot charge for disclosure if you ask to see your file within 
30 days of being notified of a denial based on a credit report. 
You may ask the bureau to investigate any inaccurate or 
incomplete information and correct its records.

If you live in a community property state*, a creditor may 
consider your husband's credit history even if you are applying 
for your own account. You still should make certain that your 
local credit bureau has a separate credit file in your name. 

If you have questions about the ECOA and the FCRA or a complaint, 
write to: Correspondence Branch, Federal Trade Commission, 
Washington, D.C. 20580. While the FTC cannot intervene in 
individual disputes, the information you provide may indicate a 
pattern of practices requiring action by the Commission.

The FTC also provides brochures about credit laws. For a free 
copy of Equal Credit Opportunity,  Fair Credit Reporting,  Credit 
and Divorce, or Best Sellers, a listing of all the FTC's 
consumers publications, contact: Public Reference, Federal Trade 
Commission, Washington, D.C. 20580; (202) 326-2222.


*Community property states are Arizona, California, Idaho, 
Louisiana, Nevada, New Mexico, Texas, and Washington.

6/78; 7/82; 3/87