Establishing and maintaining good credit can be difficult for students, but it’s not impossible. If you’re old enough to sign a binding contract—18 in Illinois—you’re old enough to obtain credit. The following explains how to obtain credit and what rights you have in the event you are denied credit.

I. Obtaining Credit. There are many factors which creditors and credit bureaus may use to decide on your risk as a debtor, but chief among these are the three C’s: Capability, Character and Collateral. If you are looking for credit, be prepared to promote yourself in these three areas.

As you might expect, creditors are concerned with one thing above all others: their money. You’ll want to show them you have the capability to pay back your loan. Keeping a steady checking or savings record with a local bank can help with this, particularly if your accounts are held in the bank from which you wish to borrow. Also, proof of your income is proof of your capability to pay. Remember, even part-time income can be used to show you have money coming in regularly. Next, you’ll need to show how you spend your income.

Potential creditors will want to see proof that you have the character of a person who pays his debts. Since this is based largely on credit history, it takes some time to establish a good credit reputation. You can begin by using a credit card and paying the balance in a timely fashion. Getting a major credit card can be difficult, but credit companies may be willing to issue you a credit card on the theory that as a college student you are just a few years away from the “big bucks.” If you are issued a major credit card, remember to keep your long-term credit goals in mind. Nothing will destroy credit faster than delinquency in paying a credit balance. If you find yourself unable to get a major credit card, try getting one from a department store. If you can, apply for a card at a store where your parents hold one.

Finally, even if you have the ability to pay and a reputation for paying, many creditors will want one more thing: collateral. Many creditors will be interested in knowing you own something of value they can seize if you don’t pay them the money you owe. The greater the amount of credit you want, the greater the value of collateral you’ll need. If you want to buy a house, for example, you should at least own a car. For the credit needs of most students, i.e., auto loans, travel, etc., collateral is not a major concern. Chiefly, you’ll need to concentrate on capability and character.

II. Denial of Credit. If you’ve ever been denied credit, you have a right to know why. A creditor can refuse to extend credit to you for a number of reasons. Sometimes people are turned down because the creditor has been provided with fallacious or out-of-date information. It’s also possible you have been discriminated against. If you think you’ve been denied credit for any of these reasons, you should use the legislation that exists to protect you.

The Fair Credit Reporting Act of 1971 provides that if a person is denied credit, insurance or employment, the rejecting party must furnish the name and address of any reporting agency that disbursed information on the rejected applicant. Since the rejected applicant then knows the source of the information, he or she can check it for accuracy.

The Fair Credit Reporting Act states in part: “Every consumer reporting agency shall, upon the request and proper identification of any consumer, clearly and accurately disclose to the consumer: 1. The nature and substance of all information … in its files on that consumer at the time of request. 2. The source of the information (in most circumstances). 3. The name or names of the recipient(s) of any report which the credit reporting agency has provided for employment purposes within two years preceding the request and for any other purpose within six months preceding the request. The disclosure shall be made by the credit agency during normal business hours and on reasonable notice.” The statute further states the disclosures shall be made to the consumer: 1. In person, provided the consumer appears and furnishes the proper identification. (Note: the consumer can be accompanied by an additional person of his or her choosing.) 2. By telephone, if the consumer has made a written request with proper identification for telephone disclosure and provided any toll charge for the phone call is prepaid or charged directly to the consumer. The statute also requires the credit bureau or other agency to provide trained personnel to explain to the consumer any information furnished. Incorrect information can be corrected and the Fair Credit Reporting Act of 1971 explains that procedure also. You can get a copy of the act from a library or even from the agency you have the problem with.

A newer piece of legislation provides you with additional protections. The Equal Credit Opportunity Act of 1977 makes it illegal to deny or discourage credit on the basis of age, race, sex, religion, national origin, marital status or because you receive public assistance. (Note: In some states other than Illinois, a creditor may ask for your immigration status, age and marital status.) This law is especially important for women. Prior to the act, a divorced or widowed woman typically received no benefit from credit built in the husband’s name. Now both spouses can benefit from the credit they build together. Also, each spouse can maintain a credit history of his or her own.

If you think you’ve been discriminated against by a potential creditor, inform them you are aware of the Equal Credit Opportunity Act. If that doesn’t produce the desired result, you can contact the Federal Trade Commission at 55 East Monroe St., Chicago, Illinois 60603; by phone (312) 353-4423. “You can’t always get what you want,” but if you are turned down for credit, you can at least make certain you were treated fairly.