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Achieving a Good Credit Score May be Harder for Women

It’s hard to believe today that there was a time when women could not apply for credit on their own. Believe it or not, their husbands needed to sign the credit card application before a woman would be issued a credit card! It wasn’t until 1974 that women were able to take charge of their own financial affairs. The Equal Credit Opportunity Act of 1974 gave women the right to apply for credit independent of their spouse’s approval.

Even though women are now empowered to handle their finances, inequities still exist between men and women regarding three areas of financial parity: employment, retirement savings, and credit stability.

Employment Issues

The American Association of University Women (AAUW) issued a report in the fall of 2016, which shows American women still earn less than men. The difference is drastic: women earn 80 cents for every dollar a man earns.

Women’s lesser status as bread winners doesn’t stop at pay inequity. Their role as primary caregivers of both children and aged parents is looked at as a disqualifying factor when it comes to handing out promotions.

AAUW’s report revealed employers are not as prone to giving women leadership roles. The employer’s assumption is women aren’t capable of handling senior positions of authority due to childrearing and elderly dependent care responsibilities. According to Career Services Manager, Lisa Andrews, PhD, “Women are definitely called upon to be more flexible…it can create all kinds of difficulties in the workplace.”

So working women find it tough to find harmony between home and work responsibilities. Women run the risk of being denied a job promotion. On the other hand, men with families go on to get fatter paychecks and climb the corporate ladder faster.

Retirement Planning

The difference for women generally gets worse with age. In general, the pay difference increases as women climb the ranks to mid- and upper-level management. This leads to a bigger difference in financial security for older women versus men.

Consumer advocate, Eleanor Blayney of Certified Financial Planning Board of Standards relates to this. “The probability is extremely high for women [that] they will be single in their retirement years.” Because financial planning is an area is which women have been undereducated, this cripples their resolve to put away funds for retirement.

Society didn’t trust baby boomer women and their mothers to be able to comprehend investment strategies. Women may have handled the bill paying, but beyond that, it wasn’t expected of them to have knowledge of financial instruments. Understanding CDs, mutual funds, IRAs, money market accounts, or other various tools of investment were above their understanding, supposedly. This necessary skill would have helped them to save for the long years of retirement.

For the modern woman, their outlook is better, but with the pay gap and investment strategies geared towards men, retirement planning may still be difficult. Women on general do have a different salary peak and longevity. Ellevest is an robo investment advisor geared towards women, taking these differences into account.

What Steps Can You Take to Gain Financial Stability?

  1. Apply for jobs at companies with an equal opportunity employment policy. The Financial Services Gender Equality Index is a list of financial firms that have committed to advancing the careers of women employees. The National Association for Female Executives also has a list of companies that seek to hire women for upper-level management jobs. They also list companies that offer flex-time work schedules and the opportunity for advancement.
  2. Make educating yourself about investing a top priority. Learning how to invest is challenging but necessary if women want to control their financial lives. Certified financial planners (CFP) are in the business of educating you, having your best interests front and center. They are obligated to do so under their CFP certification.
  3. Build a credit history apart from your partner’s, establishing accounts in your name only.
  4. Build and maintain an a-one payment history. Never pay late or skip a payment. It will damage your credit score significantly; 35% of it is based on your payment history alone.
  5. Limit the amount of debt you carry. Financial professionals suggest you maintain recurring credit balances at 30% of your credit limit. And if you can swing it lower than 10%. To give an example of how this works, let’s say your credit limit is $8,000. At 30% that would come out to $2,400; at 10% $800. The best way to control your spending is to pay off your credit card balances each month, saving on the interest charges as well.

Parting thoughts

Unfortunately, women still suffer from gender bias when it comes to pay equity, child and family leave. These lead to obstacles for career advancement. However, they can begin the journey toward financial security. For instance, peruse the lists provided by The Financial Services Gender Equality Index and The National Association for Female Executives. Begin catching up with men in earning equal pay, invest intelligently, and learn the credit game.

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