Older people can find it is not very easy to get credit

Credit institutions that use full-time employment as a condition for advancing consumer loans are discriminating against older people, according to Age Action Ireland.

The body representing older people in Ireland said people who had retired from full-time employment but may be in receipt of a fixed income such as a pension were being locked out of credit agreements.

"It's a form of hidden discrimination against older people," Mr Gerry Scully, information officer for Age Action said.

One couple who contacted Age Action were refused credit in a Power City outlet when the finance company, GE Capital Woodchester, would not provide the finance they needed to buy a washing machine in instalments.

The couple, both of whom are over 70, paid a fee to check their credit records at the Irish Credit Bureau and discovered that there were no outstanding problems.

When Age Action contacted GE Capital Woodchester, it was told that age was never a factor in refusing credit. The two criteria for receiving credit were that a person must be in full-time employment and have an annual income of €16,500.

The condition that a borrower must be employed full-time is regularly but not always imposed by credit providers for personal loans and hire purchase agreements.

The first type of consumer credit is usually unsecured: if the borrower was to fall behind on repayments due to illness, the lender would have difficulty reclaiming the loan. If the borrower died, the lender would have to reclaim the loan plus interest from his or her estate.

Some credit providers may limit their liability by lending only on condition that the borrower takes out payment protection insurance, which is effectively an added premium on top of monthly repayments.

Hire purchase agreements, however, are structured so that credit providers can more easily reclaim items in the event of a loan default, especially during the early period of repayment.

Writing in Age Action's newsletter, Ageing Matters, Mr Scully pointed out that, although a few people may work until they reach 70-75, most people in Ireland retire at 65.

"By definition, a large segment of the population who have never had a bad credit history suddenly become uncreditworthy at retirement," Mr Scully said.

Mr Scully said Age Action would have no issue with credit providers if they waived the requirement to be in full-time employment.

GE's condition that consumers have an annual income of €16,500 is "a commercial decision", Mr Scully acknowledged, designed to ensure prudent lending.

"If a person's income is not sufficient to pay for the debt, then they shouldn't be allowed to take on the debt," he said.

But employment status should be irrelevant, Mr Scully argued. "It would be fairer for people on fixed incomes (social welfare payments or State pensions) if other criteria were applied, for example their savings or credit history."

If credit providers were to ask for a guarantor, older people would have a better chance of receiving credit, he said.