Christian Topic: Credit For Elderly Singles

Adjustments of being left without a partner and helpmate through disability or death can be devastating emotionally, physically, and financially.
 
Securing credit is as important for elderly Americans as it is for younger ones. Yet the elderly, especially older widows or widowers, may find they have special problems obtaining credit.

When a spouse is permanently disabled or dies
Under the Equal Credit Opportunity Act (ECOA), a creditor cannot automatically close or change the terms of a joint account solely because of the disabling or the death of a spouse.

In some instances though, a creditor will ask for a surviving spouse to update an application or to reapply. This can happen if the initial acceptance is based on all or part of the deceased's income.

After submitting an application or re-application, the creditor will determine whether it will extend credit. While this application is being considered, the creditor must let the surviving spouse use the account without new restrictions. The creditor must respond to the applicant in writing within 30 days.

To ensure that the surviving spouse is protected, it is important to know what kind of credit accounts the couple has. There are three basic kinds of credit accounts: individual, joint, and user accounts.

1. Individual account. With this account the credit is opened in one person’s name and is based on that person’s income and assets.

2. Joint account. This type of account is opened in the names of both spouses and is based on the income and assets from both or either spouse. With a joint account, both are contractually liable for any debts.

3. User account. With this type of account, two persons' names may appear on the account, but the account is based on the income and assets of just one of the named account holders. The one on whose income the account is based is the only one legally responsible for any debts.
If a spouse is concerned about his or her credit status if a disabled spouse should die, he or she may want to try to open one or more individual accounts in his or her name. In that way the credit status would remain unaffected in the event of the death of a spouse.

Applying for credit
When a spouse applies for credit, evaluations for approval are based on income, past payment records, current and past credit accounts (both joint and individual accounts), and the outstanding balances of any open accounts.
However, the one major indicator is the applicant’s ability to repay based on current available income. As such, if the applicant is retired or employed parttime, the chances of being approved for credit may be limited.

Nonetheless, creditors must consider all income, including Social Security, retirement, and pensions. In addition, other assets and sources of income should also be considered such as stocks, mutual funds, certificates of deposit, annuities, bonds, home and other real estate, and saving and checking accounts.

Establishing a credit history
If a spouse is denied credit because of the lack of credit history, he or she probably should establish some credit. The best way to establish credit initially is to borrow against an acceptable asset.

For example, if the spouse has $1,000 in a savings account, he or she can generally borrow the same amount from the institution holding the savings account by using the savings as collateral.

Usually, the lender will charge from 1 to 2 percent more for the loan than the prevailing savings rate. So, in essence, it costs about 2 percent interest to establish a good credit history. For a one-year loan of $1,000, the net cost would be approximately $20.

The spouse will then pay back the amount borrowed with regular payments. Once credit has been established with that lender, most credit card companies will issue a credit card, although the credit limit normally would be the minimum amount.

The spouse needs to make sure that the lender reports the loan repayment history to a credit bureau.

If credit is denied
If the spouse applying for credit is 62 years old or older, the ECOA gives him or her certain protections, such as he or she cannot be denied credit because of age, disabled or deceased spouse, or the fact that he or she may not be able to obtain credit-related insurance because of age.

However, the ECOA cannot guarantee that an applicant will be granted credit. Creditors are the ones who make that decision. If credit is ever denied, the reasons for the denial must be in writing. If the applicant does not agree with the creditor, he or she can ask the creditor to reconsider, perhaps offering the creditor a compromise.

If the applicant feels that he or she has been discriminated against, he or she can contact the federal agency that regulates that particular creditor.
If the applicant decides to write a complaint to a federal regulatory agency, all facts should be included, even oral statements or discussions. Copies of all documents should be kept and submitted, along with a letter of explanation to the federal agency and, if needed, to an attorney or to the local legal aid society.

Conclusion
Adjustments of being left without a lifelong partner and helpmate through disability or death can be devastating both emotionally and physically. There will most likely be a season for grieving and expressing hurt and disappointment. During that time trust in the Lord (see Proverbs 3:5-6; Psalms 23:1-3).

If the surviving spouse will be receiving any insurance, disability benefits, or inherited funds, the money should be put in an insured savings account for at least one year—either government bonds or a savings account insured by the FDIC.

There should be no long-range financial decisions made during that first year, and under no circumstances should the spouse turn over finances to anyone to invest for him or her until he or she has recovered emotionally.
A word of encouragement from God's Word will help a spouse balance any fears regarding his or her financial future. “The Lord protects the strangers; He supports the fatherless and the widow, but He thwarts the way of the wicked” (Psalm 146:9).

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