Getting Credit Over Age 62

If you’re an older consumer who has paid with cash all or most of your life, you may find it difficult to open a new credit card account. That’s because you may have no history of how you have paid your previous credit accounts. If your income has decreased, you may find it harder to get a loan because you have “insufficient income.”  It’s not as easy as it used to be to get credit.

Applying for Credit

Applying for credit used to mean asking your neighborhood banker for a loan. Now, most applications are computerized and not manually reviewed, with the exception of mortgages. Instead, computer evaluations look at, among other things, your income, credit score, payment history, credit card accounts, and any outstanding balances. Paying in cash and in full may be sound financial advice, but they won’t give you a payment history that helps you get credit.

A major indicator of your ability to repay a loan is your current income. The lender must include all 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 can also give them information about assets and 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.

Protections for age 62 and over

If you are age 62 or over, you have certain protections under the Equal Credit Opportunity Act (ECOA).  Here is a summary:

If age is used in a score to determine your credit risk, you have to be given the same number of points as those under age 62.

You can’t be denied credit because of your age.

You can’t 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.

Retirement income can be used as income.

A lender can’t cancel your account because of age or retirement.

A lender can consider your age to favor applicants who are age 62 or older and determine other elements of creditworthiness.

While a creditor cannot take your age directly into account, a creditor may consider age as it relates to certain elements of creditworthiness. For example, if you apply for a 30-year mortgage at the age of 70, 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.

Establishing a Credit History

If you’re denied a loan or credit card because you have no credit history, consider establishing one. The best way is to apply for a secured card which is backed by a savings account.  The amount of the savings is the maximum you can charge on the account because your deposit is equal to your credit limit, and vice versa.  Make sure the company reports to the credit reporting agencies such as Equifax, Experian and TransUnion.  In addition, pay your bills on time, pay them in full and charge very little on the account.

If you are concerned about your credit status if your spouse should die, you may want to open one or more individual accounts in your name. That way, you will have credit established in your own name and your credit status won’t be affected.

Even if you are 62 or over, you can still apply for credit.  The key reasons are for safety and convenience, so you don’t have to carry cash or checks around.  If you haven’t had credit in a long time, you may want to apply for a secured card.

John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.

Categorised in: Credit Cards, Credit Report, Credit Score, Debt, Getting Credit, Improving Credit, Money & Identity

This post was written by John Ulzheimer