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About The Battalion. (College Station, Tex.) 1893-current | View Entire Issue (Oct. 25, 1979)
J Credit is liKe a job: you have to search 9 aoBc/ for it By MARCY BOYCE Battalion Reporter It's the old “Catch 22.” You want credit, but most creditors require previous credit refer ences and you have none. For students trying to stand on their own two feet by estab lishing credit, this is one of the biggest problems, said Emil Broze, head of the installment department at First Bank and Trust in Bryan. Resolving this problem, said David Benson, finance lecturer here, can be just like looking for a job. “You’ve got to go around knocking on doors and convince people that you are credit worthy,” he said. And once the individual has found a creditor who believes him, he said, it is best to take out a small loan and then make the payments promptly. A credit card will serve the same pur pose, he said. Regardless of what most people believe, said Michael Laughlin, vice-president of the Bank of A&M, “just the fact that an applicant is a student doesn’t automatically disqualify him for credit. There are many other factors which we take into con sideration.” One of the most important, he said, is the applicant’s ability to repay the loan. They determine this by subtracting an estimate of monthly expenses from the applicant’s gross income, he said. This ability to repay is also determined by the type of job he holds and his salary earned, Laughlin said. The length of time he has been with his present employer is also a reflection upon the in dividual’s economic stability, he said. Checking and savings ac count records are also a reflec tion upon this stability, said Claude Joyce, vice president of Commmunity Savings and Loan Association. For example, he said, creditors look to see if the applicant has a history of insuf ficient funds, whether or not he has saved any money and what his average balance is. Moreover, Laughlin said, it has become increasingly impor tant for an applicant to be a cus- Checking and savings ac count records are a reflection upon credit stability. Cred itors look to see if the appli cant has a history of insuffi cient funds, whether he has saved any money and what his average balance is. tomer of the bank because the present high interest rates are making loanable funds scarce. “So we have to be much more selective,” he said. Nevertheless, Laughlin said, these are just guidelines and exceptions are often made. For example, he said, he has granted credit on the basis of an applicant’s potential as a cus tomer, such as a senior who has received confirmation of em ployment and a specific salary once he graduates. But, in the event that a cred itor considers the student too high of a risk, an alternative is to ask someone who does meet the qualifications to co-sign the loan. Unfortunately, Benson said, the co-signer is as legally re sponsible for repayment as the original debtor, even though he reaps none of the benefits. And default can injure the co signer’s credit status just as well, he said. Regardless of all the precau tions creditors take before grant ing credit, there are always those individuals who default on payments. But a default doesn’t only in jure a debtor’s standing with that one company. Creditors can voluntarily submit reports of default to the Credit Bureau after unsuccessful attempts to collect the debt. However, Jim Locke, student legal adviser, said first the cred- But a default doesn’t only in jure a debtor’s standing with that one company. Creditors can voluntarily submit reports of default to the Credit Bureau after unsuccessful at tempts to collect the debt. itor must notify the customer that a report is being made to the Credit Bureau. The information on the report is incorporated into a credit file on the debtor as to the number of times he has been late over 30, 60 and 90 days, said Katie Calhoun of the local Credit Bureau. This month-history system is replacing the previous one in which a debtor was ranked on a scale of one to nine — nine being the highest risk, she said. A default remains on the con sumer’s credit file for seven years from his last payment, Calhoun said. And, she added, any creditor who is a member of the Credit Bureau is entitled to this information in the credit file. The Fair Credit Reporting Act, however, entitles the con- A default remains on the con sumer’s credit file for seven years from his last payment. And any creditor who is a member of the Credit Bureau is entitled to this information in the credit file. sumer to place an explanation for his credit default in the file along with the creditor’s dis satisfactory account, Locke said. That same act also gives the consumer the right to know what is in his file. But if he feels there is a discrepancy, Calhoun said, the complaint must be re solved with the creditor. “We don’t have any authority to remove information from the credit file,” she said. Both inputs and removals are made by the creditor. If it is a billing error, Locke said, the consumer should con tact the creditor within 60 days. The creditor then has 30 days to revise the bill or send proof that it is correct as is, he said. If anyone gets credit, the best thing to do is nurse it along. It’s hard to get, but can be lost eas ily. Women can acquire spouse’s credit rating Students aren’t alone in their struggle to establish credit. Women, too {who may also be students) find themselves in the same pre dicament, in spite of discrimination laws. Ten percent of women today are divorced or separated; 13 per cent are widowed. And many find that they have not only tost a husband, but their credit rating as well, because all credit was recorded in their husband’s name only. Measures which took effect June 1, 1977 should help prevent this situation, said Jim Locke, student legal adviser. The Equal Opportunity Act now requires that credit be reported in both the husband and wife’s name if both are to use the account. Should a woman attempt to establish credit in her name only, Locke said, she is protected by the Texas discrimination laws and should be given the same consideration as any other applicant. Credit applications are handled by account numbers so there will be no distinction made between males and females, said Robert Keahey, credit manager for Sears in Bryan. “The decision is already made by the time we get to the name,” he said. Nevertheless, Locke said, he recognizes that some discrimina tion does in fact exist. “I think the only real reason is that creditors don’t have that much confidence in the woman’s earning power,” he said. "Women, for reasons which may or may not be their fault, (such as pregnancy, quitting to get married, or less pay for equal wori<) do not have the same job security as men do.” And creditors take this into consideration when making deci sions, he said. A woman can determine is she has any credit rating at ail, by visiting the local Credit Bureau. If she doesn’t have a rating, but wants credit reported in her name, she’ll have to contact the firms she and her husband are dealing with. They are the ones who report credit. 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