Women and Credit: Why It's Important to Build Your Own Credit History

A Brief History of Women and Credit

Banks could refuse women a credit card until the Equal Credit Opportunity Act of 1974 was signed into law. Prior to that, banks often refused to issue credit cards to unmarried women. And even if a woman was married, her husband was required to cosign.

Many banks required single, divorced, or widowed women to bring a man with them to cosign for a credit card, according to CNN, and some discounted the wages of women by as much as 50% when calculating their credit card limits, according to an article from Smithsonian Magazine.

Luckily, we’ve come a long way since then, though there are still a few things to know that can ensure you can maintain financial independence. 

 

To Build Credit (and Independence), Should Couples Keep Their Money Separate? 

In my practice among the couples I work with, those in Generation X tend to keep their money separate. In some situations, a spouse will have their own checking account, and contribute to a shared checking account for shared expenses like the mortgage, groceries and items for the kids. In other situations, each person in the partnership will have separate accounts and pay for specific bills and expenses. 

What’s good about this arrangement is that each partner can spend their own discretionary money however they wish without the other partner questioning it. What can make it challenging is when one partner earns more than the other, making it more difficult to remain equitable with spending. 

Why is it Important for a Woman to Build Her Credit with Her Own Credit Cards, Loans and Bank Accounts?

Whether you have your own bank account or not, it’s extremely important to have a credit card in your only your name that you use and pay off regularly. A person needs credit for just about any financial transaction these days, from buying a car and house to getting a business credit card and other loan types.

Individual credit contributes to a personal credit score. A good credit score not only enhances your chances of credit approval but also secures better terms and interest rates on loans, saving you money over time.  Even some utility companies will run a credit check before turning on your gas, water or electricity. 

If the unexpected happens, such as a divorce or the untimely death of your partner, you might need to open your own accounts quickly without worrying about not having your own credit history. 

Having your own credit card or bank account has an additional benefit too. It provides a sense of independence by not having to run every spending decision by your spouse. Money often causes conflicts, and having some of your own alleviates this which is especially important if you’re a stay-at-home parent or earn significantly less than your spouse. 

 

What Should a Woman do if She Doesn’t Have Her Own Income to Establish Credit?

There are a few ways to establish credit for yourself even with little to no income of your own. If you are married, securing a joint car loan and mortgage will help both of you create credit activity. 

Another option is to get a secured credit card. You provide a security deposit, typically equal to the card’s credit limit. From there, responsible use of a secured credit card like staying within the credit limit and paying the bill on time can help you build credit. Look for secured cards with low fees and make sure the issuer reports to major credit bureaus. After a period of time, you should have enough history to upgrade to a standard card. 

Finally, some credit unions and small community banks will offer credit-building loans. With these loans, the money you’re borrowing is held in a savings account or certificate of deposit (CD) (a timed account) until the loan is paid off. As you make payments, the lender reports your activity to credit bureaus, helping you establish credit.

In a world where women once faced barriers to obtaining credit, the journey toward financial autonomy has been hard-won. Today, it's crucial for women to assert their own financial identity through establishing their credit. It's not just about having a card in your wallet; it's about securing your future, your choices, and your freedom. So, ladies, let's swipe into the future with confidence, knowing that our financial well-being is firmly in our hands.