To Her Credit offers targeted advice about personal finance based on unique challenges faced by women. It is authored by women with different financial backgrounds, dedicated to encouraging empowerment through financial literacy.
There was a time not so long ago when the lending and credit industry was not equitable for women.
The Equal Credit Opportunity Act (ECOA) was signed in 1974, which “prohibits discrimination on the basis of race, color, religion, national origin, sex, marital status or age in credit transactions.” Before that, a bank was free to deny credit products to unmarried women. If she were married, the bank had the right to insist on her husband’s signature. Even after the law was passed, many women continued to confront sexist attitudes when they attempted to borrow money.
Here is how four women overcame obstacles and worked the system to their advantage in the 1960s, 1970s, 1980s and even in the 1990s.
See related: Why women need their own credit
Penny Pompei is a serial entrepreneur and SCORE mentor living in Palm Beach, Florida. In the 1960s, she was a working mother in San Francisco, California, putting her husband through school by doing office work.
“Credit cards were few and far between in those days, but I wanted one because I needed a wardrobe,” says Pompei. “I had the income, so I went to a department store to apply. Back then, you had to go in person to talk with the credit manager, which I did. He said I couldn’t get it in my name and told me that my husband had to fill out the application.”
Pompei appealed to logic.
“I explained that I was the one who was working,” says Pompei. “My husband had no income, I did, so the bill would have been paid by me from the money I was earning. He didn’t care. I asked him what he would do if I wasn’t married, and it was just me and my son. He said, ‘Do you have a father or a brother?’ Well, my brother was 12 years younger than me, so he was just a child, and my father was living in a whole different state! It was going nowhere. Those were the hard and fast rules, and he was sticking to them. So rigid, so stupid.”
In the end, Pompei got the credit account after her husband signed for it. “Even in a good marriage, husbands tease,” she says. “It was like, ‘See, you do need me.’ That rankled. It was so frustrating. The whole situation was ludicrous.”
As soon as the law changed, Pompei marched downtown and applied for a credit account. “The first was from Nordstrom,” she says. “I said, ‘I want this in my name only.’ And I got it.” The ECOA, however, precluded business credit, and the problems she experienced in the 1960s reemerged.
“In 1984, I had my own business with 3 million dollars in annual revenue,” says Pompei. “I wanted a $50,000 line of credit for cash flow. I brought my beautiful business plan to the banker. He told me they don’t make business loans to women and wouldn’t even look at my plan. I said, ‘No, you can’t do that because of the law!’ He said it didn’t apply to business loans. I went to 10 banks and got the same response. The eleventh looked at my plan and said yes. I could have hugged him.”
A year later, Pompei was awarded Woman Business Owner of the Year by the San Francisco Chamber of Commerce. In her acceptance speech, she told her story.
“It made national headlines,” says Pompei. “I got a call from the congresswoman from Louisiana who had a hand in the ECOA. She didn’t know [about the business credit caveat]. I was called to testify in Washington. The law was changed a few years later.”
Linda Lauren, from Springfield, New Jersey, is a fourth-generation psychic medium. Although independent now, achieving self-sufficiency required clearing hurdles, including getting her first credit card.
“In 1970, I was 18 and had just graduated from high school,” says Lauren. “I had a job lined up as a dental assistant and needed to buy a used car for transportation. In those days, even buying a car as a woman was difficult. My father said women weren’t supposed to be on the road. I said I wanted to anyway and he said I couldn’t do it without him.”
Lauren had the cash to make the purchase. Her idea was to charge the car and then pay it off with the money on hand, so there would be a paper trail. So, she and her father went to the local bank together.
“I sat down and the lender was more interested in my legs,” says Lauren. “My father said, ‘My daughter has it in her head that she wants a credit card and I told her she can’t do that.’ I told them yes, I can do that, and I showed them that I had everything I needed to qualify for my own credit card. I was old enough to drive and had my license, a job and the cash to pay it off right away. They just kept saying, ‘No, you can’t because you’re a woman – and look how emotional you get!’ I said, ‘You haven’t seen emotion!’”
“They tried to calm me down, and called in the manager, but everyone kept saying no. I pointed to the fine print where it showed that I had what I needed to get the card and I told the lender, ‘You wrote this, right? Then you should give me the card!’ My father said to be respectful and I said I was. We were there for an hour and a half.”
Eventually, Lauren’s father agreed to cosign. His name appeared first on the card, while hers was second. Despite making the payments, she was not allowed to hold it.
“I was always fighting the system,” says Lauren. “I got married in 1973 and they did the same thing with the new car. My husband had to sign for the loan.”
“Girls today…have more freedom than I’ve ever had,” says Lauren, today a successful entrepreneur. “I own my house and a couple acres of property and launched a product called The Vibe Spray. [As a medium, it’s important] to spray your surroundings and uplift the vibration! As a woman, you need to always cover all your bases.”
Ellen Williams lives in Tulsa, Oklahoma. She worked as a registered nurse from 1973 to 1996 and has been married for 39 years. Williams has never had a credit card in her own name. The reason, she says, is her gender.
“I married an architect in 1982, and when the building was done, so was the job,” says Williams. “He had started a business and didn’t pay his quarterly taxes. The IRS came after me and my income because I got paid every two weeks. Meanwhile, he wasn’t paying the bills on time and, more than once, I came home to the lights shut off. I had two small kids at home at the time and had taken on another child, so it was really hard. My husband was the only one who had a credit card, and his credit was bad. I had to pay that debt off and the taxes, too.”
As Williams was trying to rectify her husband’s financial problems, she applied for a personal credit card.
“They turned me down,” says Williams. “I was making money and had funds in a trust. I turned to the trust company to vouch for me as a borrower, but they turned me down, too. Every time I talked to the company, they would pat me on the head and ask me what my husband thought. I had to send him in because they wouldn’t even talk to me. Basically, they said I was a bad credit risk because I’m a woman and told me to shut up. I had a college degree, but I was very devalued in everything I said.”
So, Williams decided to reject the system. “I was feeling out of control and frustrated,” she says. “I realized I had to pay cash for everything, so that’s the way I operated.”
Today, Williams has over a million dollars in assets. “I got a female accountant who was wonderful and she helped me,” she says. “She mentored me and pulled me up. Now I’m very comfortable financially.”
In retrospect, Williams says she wishes she had been able to borrow in her own name. “Every woman should have her own credit card,” she says. “I was just a working girl saving my money. My husband was the one with the bad credit, not me. They should not have been so condescending. Had they listened to me, to begin with, it would have been synergistic and not adversarial. But that’s the way it was back then.”
Loreen Gilbert is the CEO of WealthWise Financial Services, with offices in Irvine, California and Dallas, Texas. Gilbert started her firm in 1997, after a prosperous career, first at Fidelity Investments and then selling retirement plans to municipalities.
With her strong professional background, assets and connections, she was a great credit risk and was ready to launch her company. It would stand to reason that banks would come calling to partner with her, right? Wrong.
“I was a micro-entrepreneur at the time, but I never had any financial institution seek me out or try to get my business,” says Gilbert. “It was (and in many ways still is) a different scenario for men versus women in the 1990s. Discrimination can be hard to prove, but it was a different attitude. There wasn’t the same willingness to pursue me as a customer. So many in banking, especially those in the positions of making decisions on loans, were men. There was a skepticism about women business owners, that they would not be as large or successful. It’s a filter that may not have been intentional, but it was real.”
Gilbert was in the market for credit products but was hitting walls, so ended up using her own funds instead. Now, after decades of being in business, she is a huge fan of the Small Business Administration, which enabled her to buy her business building. She wishes she had known about the SBA back then, which offers many avenues to access credit.
Another discriminatory practice that Gilbert identifies is the personal guarantee on lines of credit, which gives lenders the right to claim the business owner’s personal assets in the event of default.
“Many of my male counterparts weren’t asked to provide personal guarantees, but I was always required to sign one,” says Gilbert. “I didn’t understand why they weren’t just looking at the numbers. [My numbers] were just as good, if not better, but I had a personal guarantee and they didn’t.”
Looking back, Gilbert recognizes the problems. “As a female business owner in the ’90s, it was just more difficult,” she says. “It even took me a long time to get a business credit card. I didn’t get one until the 2000s. I remember getting my first business credit card from Capital One and being so excited. It made me feel like an official business owner.”
Gilbert offers words of wisdom to today’s women entrepreneurs: “Establish a relationship with a regional bank that caters to small business owners and that has women in key leadership roles.”
Today and tomorrow
Although the lending industry is prohibited from discriminatory practices, covert sexism still exists. One way the system should change, says Gilbert, is for banks to make an effort to be more inclusive. According to a June 2021 Bloomberg report, women now control a third of director seats on the boards of major U.S. banks.
“Add more women to your board and on the lending committee,” says Gilbert. “It’s important that the leadership team understand its customers, as you have an opportunity to gain a customer for life.”
As for Pompei and Lauren, they are emphatic about teaching children about the way things were, so it never happens again. “And to never give up,” says Pompei. “One person can make a huge change. You have to stick your neck out and take a chance.”
If you believe you have experienced illegal practices in the credit marketplace, find out what you can do by visiting the Consumer Financial Protection Bureau.