This is part of a continuing series of free-lance columns that help explain how to deal with situations in our lives and/or how to make life more enjoyable. In spite of laws in recent years making it illegal to discriminate against women who are applying for credit, there are still some hurdles to overcome. One of them is to teach women how to successfully apply and qualify for credit.
"There is no mystery to obtaining credit if you follow a few simple guidelines," states Emily Card, who has a Ph.D. in political science from Columbia University and is author of "Staying Solvent: A Comprehensive Guide to Equal Credit for Women" (Holt, Rinehart & Winston). She also hosts a cable television show, "It's Your Money," and is a contributing editor to Ms. magazine.
Building a History
She has developed a method for building a credit base that depends, first and foremost, on obtaining a Visa card or MasterCard. From that base, she says, you can subsequently build a credit history that will eventually qualify you for a major loan.
Do you want to purchase a new car? Borrow money for a trip around the world? Buy a condominium? If so, you will probably need a good credit rating to do it. As anyone who has ever been turned down for a loan is aware, obtaining and maintaining credit is essential to functioning in the 1980s.
But suppose you have been turned down for that all-important bank card and you don't know why. The most common reason is "insufficient credit file." Even if that is true, chances are you went about applying in the wrong way. Start over again by establishing a relationship with your bank or savings and loan company.
Do this by opening an account--savings, checking or both. Now you are ready to fill out an application for a Visa or MasterCard, being certain you meet the requirements of your bank, including minimum salary. Inquire ahead about these. Never offer any unasked-for information about yourself, especially negative information. For instance, don't write divorced; write unmarried.
The next step is critical, and Card advises not to take shortcuts here. Request an appointment with the bank manager to discuss your application. Don't decide to talk to the assistant manager because you don't want to bother the manager, and don't drop by on the way home from the market with several kids in tow. You need to see the manager because you are going to ask him or her to initial your application, thereby giving preliminary approval. The centralized processing center, which processes loan applications but doesn't know you, had better have a very good reason to turn you down once you have obtained those vital initials.
When that important little plastic card arrives in the mail, you establish that you are a good risk by meeting your obligations on time.
After a few months, you are ready to open a department store account. In most cases this can be done by simply using your bank card as a reference. After a period of time has passed, during which you have used your accounts conscientiously, you now qualify, income permitting, for an auto loan or even a mortgage.
The final step is very important whether this is your first loan or you have been turned down for a loan, even though you believe you qualify. Check local credit bureaus to be sure your accounts are being reported correctly.
Do this by writing to TRW Information Services, P.O. Box 5450, Orange, Calif. 92613-5450 and to Trans Union Credit, 1400 N. Harbor Blvd., Fullerton, Calif. 92635. You will need to send your full name (include initials, "junior," "senior," "II" or "III" when applicable), Social Security number and your address(es) for the past five years and a check for $8 to each service. Misinformation can get into your record, and you are legally entitled to correct it.
Card was instrumental in the passage of the Equal Credit Opportunity Act of 1974, under the sponsorship of then-Sen. William E. Brock, now the Secretary of Labor. Today, more than 10 years later, Card believes that women are still often discriminated against in the credit arena. A married woman in California is entitled to have credit in her own name, and because this is a community property state, her spouse cannot be required to co-sign.
"Creditors sometimes ignore the law, and it's up to women to remind them," Card adds. In a separate request, a married woman also needs to check her husband's credit record to be sure that her credit isn't being reported in his name.
What if you find yourself in an economic crisis and can't meet all of your bills? How can you protect your good credit?
First, stay calm, and realize this is a temporary situation. List all bills, due dates and grace periods. Pay bills only when they reach the grace period and pay only the minimum due. If you can't send the minimum, send each creditor something. If you feel the crisis may last for several months, write or call each credit manager and explain.
Always pay Visa or MasterCard and Sears the minimum due if possible because they report monthly to the credit bureau, and a string of late payments could hurt future credit.
Some department store accounts are slower to report. This is another fact your credit report will show you.
Finally, don't charge anything more until the crisis is over.