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Of all the many
different types of credit - for example, retail
credit, loans, charge cards, and mortgages - utility
credit may be the one that most people cannot do
without. Utility credit is the credit extended to
users of gas, electricity, and water services. Phone
service also can be considered a utility.
Having an account with a utility provider is a lot
like having any other credit account: You get
service now and pay for it later. And, like other
creditors, utility companies keep a record of your
payment patterns. This record becomes your utility
credit history. It's important to have a good
utility credit history because it becomes part of
your entire credit history, which often is a
determining factor in your ability to get credit -
including utility services - and sometimes even a
job, in the future.
To ensure fairness, federal law prohibits utility
and other companies from engaging in discriminatory
practices. Specifically, under the Equal Credit
Opportunity Act (ECOA), these companies cannot
discriminate against consumers on the basis of sex,
marital status, race, national origin, religion, or
age. They also cannot discriminate against people
who receive public assistance.
Here's a look at how the law works when it comes to
utility services:
Deposits
Utility companies frequently require new customers
to make a deposit or get a letter of guarantee from
a person who agrees to pay the bill if the customer
does not. Under the law, requiring only some
customers to pay a deposit or get a letter of
guarantee is offering them credit on less favorable
terms. If done on a discriminatory basis, it is
illegal.
The utility company generally can require you to
make a deposit or obtain a letter of guarantee if
you are a new customer and all new customers are
required to pay a deposit, or if you have a bad
utility credit history.
The utility company cannot require you to pay a
deposit because any previous utility services you
received were under your spouse's name and not
yours. If you can show that you had utility service
in a spouse's name, the utility company must
consider the utility credit history yours. If you
share your spouse's utility credit history, it could
be unlawful for the utility company to require you -
but not your spouse - to pay a deposit.
Determining Your Credit History
What if your spouse had a bad utility credit
history? Could that reflect on you? In some
circumstances, it could.
If your spouse's credit history is bad, the utility
company could consider that credit history yours and
ask you to pay a deposit or get a letter of
guarantee. However, the ECOA gives consumers the
opportunity to prove that their spouse's bad credit
history does not reflect their own unwillingness or
inability to pay.
For example, if you were seeking utility services in
your own name but your bad credit history reflects
your former spouse's credit practices, not yours,
the utility company would have to consider any
evidence you provide that you were not part of your
former spouse's bad credit practices. That might
include information demonstrating that you did not
live with the spouse when the account was overdue,
that you never saw the bills, or that you paid the
bills once you discovered they were overdue.
However, your spouse's utility credit history can be
considered yours if your spouse lived with you or
you benefited from using the account. If you live in
a community property state, the utility company can
consider any information about your spouse that it
can consider about you when determining your credit
history - even if you were not living together and
did not share the account while it was open. To
learn whether you live in a community property
state, check with your state consumer protection
agency.
If you cannot convince the utility company that the
bad credit history is not yours, you may have to pay
a deposit or get a letter of guarantee. Or, you may
be asked to pay your spouse's old debts before your
service is connected. In the latter case, the
company's right to take such action is governed by
state law, not the ECOA. Contact your city or county
consumer protection office for more information.
Get It In Writing
If you are denied utility credit (or any credit) or
offered less favorable credit terms than you applied
for and you reject the offer, you have the right to
know the reasons for the company's action. If your
application is denied, or if you reject the
company's offer of less favorable terms, the company
must send you a notice stating either the specific
reasons for the action or stating your right to get
the reasons within 30 days (if you make your request
within 60 days of the company's notice to you).
Always put your request in writing.
Learning the reason may help you become more
creditworthy, correct errors, or detect unlawful
discrimination. |
