Woman; 125; Credibility Gap Credit for Women

The thing. Then the next generation of women to deal with. Good evening and welcome to woman Our topic tonight. It's credit my guest this evening is from the Center for Women Policy Studies in Washington D.C. the center research is action projects and litigation in the field of women's rights. Recently with the help of the Ford Foundation they undertook a study of legal and economic barriers to women obtaining credit. With me tonight is Nancy Polakoff assistant to Margaret Gates co-director of the Center for Women Policy Studies. Nancy is currently investigating the availability of credit to women. Welcome to the show Nancy. Thanks. Have you generally found that there is discrimination in the area of credit. Oh I think it goes without saying and and the other women's groups and groups that have worked in the area have

found the same thing. What are the major areas of credit discrimination. Well there's discrimination in obtaining retail credit which includes department store credit cards bank credit cards. Then there's consumer loans and home financing and mortgage loans as well as business loans and educational loans. What have you found are the barriers to Equal Credit Opportunity for Women. In some cases it is state laws in the area of property such as community property laws or some domestic relations laws which are used as reasons why women are not considered credit worthy. But by and large it's false assumptions about women which make it more difficult for women to get credit than it is for men. What do you mean by full to some Chins about women. Well there's a feeling especially directed towards married women that because they're married they will naturally get pregnant and because they get pregnant and have children they will naturally leave the workforce that that kind of an assumption makes it very difficult for a working married woman woman to be taken as

seriously as a as a working married man is in the credit field. Let's get specific and get into some of the areas that you mentioned how about credit cards. Well I think the major problem with credit cards comes not from single women who get credit cards pretty easily but with married women and formerly married women. Married women will find that if they've had credit well single. The creditor is very reluctant to not to reissue credit in the husband's name. A woman who changes her name when she gets married will find that a new application is sent to her and she'll be required to reapply with all sorts of information about her husband and a new card will come with her husband's name on it and not her own in which case she's lost all or she's lost her credit account it's no longer hers it's really her husband's. Well what should she do. Well in that particular instance there's one thing she can do if she doesn't change her name upon marriage there's no reason to notify her creditors that she's gotten married men certainly don't

think to do that. If she does change her name she can be very firm about insisting that the card is issued in her first name and her new last name. If there's a new application issued to her she should refuse to to fill out the information that would fit with their bio make. The card issued in her husband's name and if they do issue a card in her husband's name which they may do anyway she should send it back in and demand that she get her own card. And what if the woman changes her marital status the other way goes from married to divorced. Well the problem is usually a little bit different because women when they're married usually use their husband's credit. They usually have a credit card that reads Mrs John Smith instead of Mrs. Mary Smith. If they have had cards reading Mrs Mary Smith they need not notify the creditor of their divorce. But if all of their credit has been in their husband's name they're what's called in the in the credit world a new face. And when they apply for credit it's as if they never had anything to do with their

husband's credit even if they paid the bills for. For years. There isn't there isn't a big way out of this except hopefully through the legislation that will prohibit discrimination on the basis of marital status because they are applying for credit for the first time and in less the good that they've contributed to the credit rating of the marriage is counted. They will be considered to have had no credit background so marital status is a condition for credit or at least a consideration like creditors. Well it certainly is. I mean it there's a there's a slot for marital status on on credit application and they do take into account either in their objective criteria or more likely in just their subjective attitudes. What they what marital status your for example the assumption that the divorced people are unstable no matter who you are if that seems to be a pretty widespread assumption.

There's a process called credit scoring is that right. Right. Would you explain what that is. Well credit scoring probably you've seen in the in the in newspapers banks frequently will be advertising to get loan customers. And they will. Put forward a sort of a questionnaire that looks like a lot of fun to fill out and you get points for the different answers and you're actually rating your credit worthiness according to certain objective criteria. These systems frequently discriminate against women sometimes in subtle ways and sometimes a not so subtle ways. One of the subtle ones is that you frequently get an extra point or two if you have a phone listed in your own name. Well most married women do not have phones listed in their own names the phone is in their husbands name therefore they lose two points simply because their husband is the boss is the person who has a phone in his own name. There is also frequently marital status becomes a factor because when you have to check off your marital status between single married divorced separated and widowed everything gets one point but

married gets two points so if you're married you're automatically ahead of the game in terms of your credit worthiness according to most credit scoring systems. There are different criteria for men and for women. While the. In a sense I guess the credit scoring system is one example whereby it's more likely the man will have a phone in his name then than it is for a woman. And I would say that on an applications where you have to put down information about your spouse there will be circumstances under which they will consider the husband's information differently from They'll consider. From the way that they'll consider the wife's information if the husband is applying for credit. And also in terms of cosigners for loans which is frequently a problem a man. Who has a good income is not liable to be required to have a loan cosign by his wife unless they're unless it involves land and there's legal title reasons. But a woman applying for a loan no matter what her income may be required to to have a male cosigner even somebody like a

75 year old father on on Social Security or a teenage son or a former husband. What is the difference between say a divorced woman applying for a house a mortgage for her house that she wants to buy and a single woman is their difference. Well they're both probably in trouble. Single women are in trouble applying for mortgage loans because of some of the false assumptions we talked about earlier. It's assumed that a single woman will marry and that when she marries she'll follow her husband wherever he lives. And therefore leave the house it's also assumed that that a single woman because she's a woman doesn't know how to keep up property the way the way a man does. Those are some of the some things that make it difficult for a single woman to get a mortgage loan. A divorced woman who has a difficult time getting credit in just about any area may have it may have a doubly difficult time in the mortgage area because its creditors are so reluctant to take risks.

What about a married woman who works. And has an income and applies with her husband for a mortgage. Well. That's that's the area that's gotten a lot of attention because of the outrage isn't it. A couple who apply for a loan will frequently be told that the wife's income or that one of their incomes must be discounted either not counted at all. Or discounted a certain percentage. And this again goes back to the assumption that because she's a woman she will get pregnant and because she will get pregnant she will have children because she will have children she will leave the workforce and that therefore they will default on the mortgage. Nobody's heard of a default due to pregnancy but but that seems to be the rationale behind discounting the wife's income. So what's happened what's happened until recently and it's still going on we understand is that women are actually required to sign written affidavit saying that they're following up a prescription. Physician prescribed form of birth control. Frequently they're using the pill or or some other known to be effective contraceptive before they'll be granted a

before their incomes will be counted. It's also been known to be required that a woman write on that same letter that if she gets pregnant she'll have an abortion. That seems to be how House sure creditors are that the pregnancy will lead to the ultimate default. You know the actual cases where the oh yes. Oh yes. One of the one of the women who became most active in the field of credit discrimination got into it because she was required to write such a letter before she and her husband could get a mortgage. What recourse does a woman have. You've listed several ways that women are discriminated against there must be some because this is a. Well there are some state laws now. 22 states and the District of Columbia have laws that prohibit some kind of discrimination in the area of credit. Not all of them are as an inclusive as they could be but but they do provide some kind of recourse and we don't really know how effective they're all being because there are some of them are very recent. And the oldest of them are no more than two or three years old. So there hasn't been a whole lot of of

litigation or any kind of action involving these. These suits frequently we find that a woman who is discriminated against need only find somebody who sounds like they have authority to make a phone call to a vice president or somebody higher up than the person who turned her down. And she'll get her credit so that frequently there's a process of conciliation that goes on that makes it that makes it easy for the woman ultimately to get credit if she's willing to to fight a little bit. Is there one really good state law that is sort of a model or. Well we would say that that a state law that that would be really good would cover discrimination both on the basis of sex and marital status in order to cover that mortgage situation that we previously discussed. And that it would apply to all creditors that it would cover consumer credit and would cover home financing and. And and wouldn't leave any loopholes there. And. As far as we can tell there are several there are several states with laws like that. Although the enforcement

provisions are frequently What would hold States back from from having really good laws administrative remedies are usually handled through Human Rights Commission. And if somebody is discriminated against She can file a complaint with her Human Rights Commission. They will investigate it and do something about it. But since these remedies are frequently ineffective depending on the on the state and the Human Rights Commission. There is it is a good idea for a state law to have a private right of action and it also hopefully providing for attorney's fees so that there's no problem in in women who are discriminated against not being able to afford to go to get to go to court and get their rights. And we found one state in particular the state of Washington where not only were all of those elements present but but they had gone one step further and and the step that seems to be very necessary and that is that they're educating both the public and the creditors to know what the law requires of them. A woman named wonderful now has set up credit schools. And these credit schools are actually

seminars that she takes to various creditors in all aspects of credit teaching them what they must do now to comply with the law. Then they have brochures for women and now groups who monitor the law and it looks like the women in Washington not only have a law that's good but they know that they have a law and they know what their rights are. And they can use that law more effectively than somebody who may have a law and not know that it exists due to lack of publicity with the Equal Rights Amendment help. The poor Rights Amendment may help. It's still unclear but the Equal Rights Amendment applies only to state action and a private department store for example is not likely to be reached on the other hand a federally chartered insured bank might well be. There is some litigation now under the 14th Amendment to the Constitution which which has the same state action requirement. And. Presumably the outcome of against the bank and presumably the outcome of that will be indicative as to what the courts will do under the Equal Rights Amendment.

What about education loans are women discriminated against in that area. Well the answer is a qualified yes and the reason it's qualified is because there's so little data available both in the area of educational loans and in the area of business loans to women. It's simply a question of no one ever bothering to keep the statistics or keeping very haphazard statistics and not having them available. For example it doesn't do much good to know that women are X percent of all loans. If you don't know how many women applied for them. And there is no data available on the number on the sex of the applicants therefore it's hard to tell exactly what kind of discrimination is going. It is happening just in terms of sheer figures. It's clear that the men are making out better than women are. Do you feel there are repercussions from all of this to feel that women are suffering. Well we live in to a very credit oriented society. I think that goes without saying. And. There's no there's no sense that women should have credit so that they

can use money haphazardly. There's no sense that anybody should have credit for that reason. But but women need credit for this to to achieve the same economic clout that men have with credit and to make the lot their lives easier. The way credit makes the lives easier for anybody who who needs it but it is of course in the areas of education and in the areas of housing it's a lot more than just making life easier it may it may be a crucial difference between a whole standard of living for a lifetime. Can you explain very carefully very precisely and very specifically what women can do to prevent some of these things happening to themselves. Well the first thing we'd like to see happen is for creditors to change their policies but that's not going to happen until women start start acting. We mentioned before what women can do when they go from being single. To being married. That's the kind of

that is a kind of protection applying for credit cards when you're single will be a lot easier than applying for them when you're married and therefore if you expect to get married you might apply for. For credit while you're still single and therefore and thereby avoid the hassle you have to go through all of being a married woman applying for them and then is there no particular kind of credit that's better. Credit cards better or take out a loan when you're single and pay it back instead of a better thing to do. I don't think so I think anything anything that you do the disturbances yourself as a credit worthy person is helpful. I suppose that the more substantial the credit is that the better you'll be viewed later on. But every little bit is helpful and and there's nothing worse than than writing down on your credit application that you have NO NO credit experience whatsoever. That's when you've been treated with the closest scrutiny.

What about a married woman is there something say she she doesn't have a credit rating of her own what can she do to try to get one. Well she can start the next charge account that she wants can't she can apply for in her own name or she can request a change for example if there's a department store that she shops on and she has a credit card that she's been using in the name of Mrs. John Smith. She can apply for her own account or apply for a new account in her own name so that. That. Credit card which she's been using all along will now reduces Mary Smith. And then it will be her credit. Of course what we have to make clear that they were not aware that we are talking about about wives who are credit worthy. In other words not not one of us of men who were working but women who were working or have some other source of income so that in their own right. They are entitled to to have credit in their own names. And. If they if they are in such a position and they establish themselves with a credit rating

then theyre protected against the problem that they be false to many women upon the the death of their husbands or upon divorce which is that theyre in a crisis period of their lives when they need credit. And when its most difficult to get it. And they are a new face. A woman. A woman will find upon divorce that that if she and her husband have maintained a good credit rating it will not follow her but that if theres been a good bad credit rating even if its the husband's fault it will follow her. Its a double bind that the women are in right now. And. The only way out of it until we can fight it through through the courts and through laws is for married women to have credit in their own names so that in the event of a death or divorce Theyre not to get credit face. If there are certain bills that you pay as a wife and you pay them regularly and you're responsible for them because you have a job that doesn't help you know you might think it would. But as long as that credit is in the husband's name if it's an automobile loan and

it's the woman's car and she's made every payment on it. If the loan in this is in his name in the end the car is in his name. It's not going to count to the credit world that that the church that she wrote the checks. There. They just look at the face of the of the loan and see that it's hers and his and not hers. Is the only answer federal legislation do you feel. I think that's the best answer is there is arms of Hendon now there. There is legislation in Congress. A law passed the Senate last summer which was one of the amendments to the Truth in Lending Act which would have which had a provision prohibiting discrimination on the basis of sex and marital status. It's now in a subcommittee of the house and and is being considered and we hope that they'll be legislation out before the end of the year. And and that that will give unified national basis for fighting credit discrimination. What are some of the reasons that creditors give for not extending equal credit to women and. Well some of the reasons they give are that women are less

stable than men that the women don't. Work are not permanent forces and in the work permit factors in the workforce which of course is is is completely false these days credit creditors frequently assume that a working woman is there temporarily until marriage or if she's married that she's there until childbirth. The statistics prove that these assumptions are just false that the women don't stop working when they get married. Automatically. And whatever statistics of course are true about the class even are not necessarily true about individual women. And when the credit where the credit determination process is very much a process of weighing the individual and there there really should be no place in it for mass prejudice against the class of of people. So it's your feeling that women are not proven bad credit risk. On the contrary what studies do exist show women to be very good credit risks. Of course those are the studies of women who have

obtained credit in because of past discrimination they've probably been very highly qualified women but. But there is there is no data that anybody has been able to show indicating that women are in general or worse credit risks than men. Have there been lots of credit discrimination test cases in the courts. No there's there's one that I know of that I mentioned resting on the 14th Amendment that doesn't even have to do with the state law. But by and large credit discrimination is being approached as a conciliatory process. Those one phone call is frequently enough to get a woman credit. Now. That's good for the individual woman and may be bad for broad based change because. One woman obtaining credit is not much of a precedent. The store or the bank can go back to their same discriminatory policies and. And only sort of give in when they're when they're caught. But that seems to be the trend these days towards writing a

letter or making a phone call and getting an individual woman her credit. But Nancy what her credit reporting agencies. Credit reporting agencies or credit bureaus maintain massive. Files on on individual's credit worthiness and are used by various creditors in determining whether or not to extend credit to women. The problem with most credit reporting agencies in terms of of sex discrimination is that they will lump a married man and a married woman in the same file. There is recently been passed a law in California that specifically states that if a married couple wished separate files kept by a credit reporting agency that that agency must do so. Procedures like that are absolutely crucial in order to ensure that a married woman will in fact be considered a separate credit entity or else she faces the same problems that that she might face. For example upon divorce. They'll look at the at the file and see that the husband's bad credit

rating will go along. But that the good credit rating which may have been developed by the couple will not go along because it's not presume that the woman contributes to that. If she has her own separate file then there can be no doubt whether she's been a bad or good credit risk. When of the things we were talking about earlier and I'd mentioned to you that I'd seen some ads in several magazines inviting women to apply for credit and stating that the company did not discriminate. Well. I suppose I'm a little cynical but I but I don't place too much faith in those ads. They're a very good PR job for that particular company. There have been numerous complaints lately from women who have applied to one of the major credit card companies that had such an advertising campaign. Saying that they applauded in that they met the objective criteria which essentially was a certain salary level and that they were nevertheless denied. I don't think it's any proof from the fact that that a creditor participates in in such a. Advertising campaign

that that that creditor has really changed the credit policies. It's certainly not not sufficient to prove that that's happened. A term that I've heard a lot is family expense down to and necessary it's laws and I haven't any idea what they are but I know that they're important to this issue as well. They are important because the support laws have been used by creditors as a reason for denying married women credit in their own name as the creditor has said if we give this woman credit. And she defaults on her debts. Or even if she doesn't her husband is responsible for paying them because the law says that a husband has a duty to support his wife. Well. First of all the the support laws are not generally interpreted to have anything to do with the marriage relationship while it exists. And there are several court cases holding that a woman who voluntarily undertakes an obligation based on her own ability to pay can't be relieved of that obligation because of support laws family

support laws by the way. Extend to necessaries. They don't extend everything a married woman buys but to those things which are considered necessary is no necessary as you may think are food and shelter and clothing. But in fact they're anything necessary to maintain the standard of living so that there are there have been at least one case where a fur coat was was said to be unnecessary because the husband and wife were used to living in a certain style. Family expense statutes which are in existence in about half of the states. Almost half say that for expenses of the family either a husband or wife can be held liable. In those states creditors have very little excuse. For using the already flimsy excuse of support laws for denying women credit. Nancy do you think it's always clear to women when discrimination is taking place. Well I would have thought so up until recently. But. But I've talked to no number of women and read some things that women women have written in and it

has become clear that. For some reason women are so used to being second class citizens that sometimes it's just unclear when when discrimination is taking place for example a woman who applies for for a charge account to department store having no idea that getting a card in her husband's name means that she isn't receiving the credit. Well. That is discrimination. She is not getting credit that she deserves. Yet she may think that the card that says Mrs. John Smith really means Mrs. Johns means her and not her husband when it doesn't. Is there one single most common mistake that women make most frequently when dealing with this situation. In terms of credit problems yes. I guess only naivete that I can think of. The idea that there is no discrimination women who apply for credit nowadays ought to be aware that

the discriminatory policies are still strong and still go on. And receiving credit in their own name is what counts. And. That it is in their area. Perhaps illegal to discriminate. If it's illegal then then they ought to know their rights. I know that there's a place to go to get Nancy I'm sorry we're out of time I thank you very much for being here. Good night and thank you for watching women. You're. If you make $12000 a year and your husband makes 10 Why won't your

salary become good when you apply for a mortgage. I'm Sandra Elkan of PBS is woman show on our next program. My guest will be credit expert Nancy Polakoff. Will show how sexism strikes home through society's financial institutions. Join us for this discussion of the credit ability gap on woman. Oh.