Women and Evaporating Credit Histories

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Each year, some women still find themselves being discriminated against when seeking credit under their own names. There are two federal laws in place to protect women when they're seeking credit and to protect their credit histories: the Equal Credit Opportunity Act (ECOA) and the Fair Credit Reporting Act (FCRA).

The ECOA makes it illegal for creditors to discriminate on the basis of race, color, age, sex, or marital status. It also prohibits discrimination based on whether an applicant receives public assistance, or has previously exercised her rights under any federal consumer credit protection laws.

The FCRA, among other things, protects consumer privacy and safeguards the accuracy of credit reports. This law is designed to protect women from becoming victims of credit history "evaporation."

Credit history "evaporation" can occur when a woman has her name changed, divorce, marriage, or any other reason. When she next applies for credit, a history check may uncover the fact that she has no credit history. In fact, a credit report could show that Mary Smith has no credit history at all, as if she had never existed. And this result would merit the application being denied.

However, while the divorced "Mary Smith" does not have the same good credit history as the married "Mary Jones," FCRA seeks to address the fact that they are the same person and should be considered as such.

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The law states that creditors must report the history of a joint account to a credit bureau, in both names, provided the account was opened after June 1, 1977.

Guidelines for Women
The Federal Trade Commission (FTC) gives women advice on how to handle their credit records. Creditors should understand the types of information and guidance women receive so that they will be prepared to handle requests legally. A woman is told the following:

Have her credit files checked and corrected as quickly as possible.
If there is no history, contact each creditor and ask them to reenter her history under each name she used.
Ask creditors to consider a credit history under the name of a husband, or former husband, if she can prove she paid the bills.
Question credit denials immediately to determine an "evaporation" situation exists.
Watch credit after the death of a spouse as credit cannot be canceled solely for that reason. However, creditors may ask her to update her application or reapply in some instances (e.g., if the loan was originally granted based on some part of his income).

A good credit history, often the only doorway to getting more credit, is how most companies predict a customer's future payment success. If history "evaporation" is suspected, the credit manager and consumer should work together to get things straightened out. One side effect of such efforts could be a loyal, repeat customer.

Editor's Note: This article originally appeared in the Credit & Collection Manager's Letter. Editor's Note: This article originally appeared in the Credit & Collection Manager's Letter.