utility credit
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utility credit

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There are dozens of different types of credit you can obtain -- department-store credit accounts, auto loans, Visa and Mastercards, mortgages, and many more. But utility credit is probably the most important kind. Utility credit is the credit you need to open an account with the electric, water and gas companies. Even if you don't qualify for the Sears card or a primo mortgage rate, you definitely want enough credit to get the electricity turned on in your apartment or house.

The utility companies work pretty much the way everyone else in the credit world works: you get service now and pay later. And the electric and water companies keep records of how timely you are in paying your bills just like everyone else does, and what they record goes on your credit report. And if you haven't learned yet, your credit report is the closest thing in life to that "permanent record" your teachers were always warning you about in school. The bills you don't pay on time are recorded and can come back to haunt you later on, even if you're making a lot more money at that time.

There's one big difference between utility credit and the credit you get from stores, banks, and the like: the law. Simply put, it's a lot harder for the electric company to turn off your power than it is for the credit card company to cancel your account. The government isn't totally heartless; they don't want families freezing or starving to death just because they're short of cash this month.

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.

Determining Your Utility 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.

For More Information
The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit www.ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.



 

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