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Equal Credit Opportunity Act

The law says everybody, regardless of race, sex, marital status, age or national origin, must be judged by the same standards

Equal Credit Opportunity Act

The law says everybody, regardless of race, sex, marital status, age or national origin, must be judged by the same standards.

Credit is a fact of life. Without credit the purchase of many big-ticket items would be impossible, that is why having equal access to credit is essential, and protected by law. 

There is a federal law, the Equal Credit Opportunity Act (ECOA), which says all consumers should have the opportunity to apply, and be considered, for credit based on the same objective factors as everyone else. Some of the factors that may be considered are, income, expenses, debt, and credit history. Some of the factors potential credit grantors may not consider are your age, gender, marital status, national origin or religious preference.

The ECOA applies to any creditor who regularly grants credit. If you apply for credit with a bank, small loan or finance company, retail or department store, credit card company, or credit union, then the law applies. The federal laws do not guarantee that you will be approved for credit, only that you will be considered on the same basis as anyone else. 

When You Apply For A Loan Or A Credit Card, A Creditor May Not 

*Discourage you from applying because of your sex, marital status, age, race, national origin, or because you receive public assistance income. 
*Ask you to reveal your sex, race, national origin, or religion. A creditor may ask you to voluntarily disclose this information (except for religion) if you’re applying for a real estate loan. This information helps federal agencies enforce anti-discrimination laws. You may be asked about your residence or immigration status. 
*Ask if you’re widowed or divorced. When permitted to ask marital status, a creditor may only use the terms: married, unmarried, or separated. 
* Ask about your marital status if you’re applying for a separate, unsecured account. A creditor may ask you to provide this information if you live in "community property" states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, and Washington. A creditor in any state may ask for this information if you apply for a joint account or one secured by property 
* Request information about your spouse, except when your spouse is applying with you; your spouse will be allowed to use the account; you are relying on your spouse’s income or on alimony or child support income from a former spouse; or if you reside in a community property state. 
* Inquire about your plans for having or raising children. 
* Ask if you receive alimony, child support, or separate maintenance payments, unless you’re first told that you don’t have to provide this information if you won’t rely on these payments to get credit. A creditor may ask if you have to pay alimony, child support, or separate maintenance payments. 

In Deciding To Give You A Credit Card Or Loan, A Creditor May Not 

* Consider whether you have a telephone listing in your name. A creditor may consider whether you have a phone. 
* Consider the race of people in the neighborhood where you want to buy, refinance or improve a house with borrowed money. 

 Consider your age, unless:

* You’re too young to sign contracts, generally younger than 18 years of age
* You’re 62 or older, and the creditor will favor you because of your age
* It’s used to determine the meaning of other factors important to creditworthiness. For example, a creditor could use your age to determine if your income might drop because you’re about to retire
* It’s used in a valid scoring system that favors applicants age 62 and older. A credit-scoring system assigns points to answers you provide to credit application questions. For example, your length of employment might be scored differently depending on your age. 

When Evaluating Your Income, A Creditor May Not... 

* Refuse to consider public assistance income the same way as other income.
* Discount income because of your sex or marital status. For example, a creditor cannot count a man’s salary at 100 percent and a woman’s at 75 percent. A creditor may not assume a woman of childbearing age will stop working to raise children 
* Discount or refuse to consider income because it comes from part-time employment or pension, annuity, or retirement benefits programs. 
* Refuse to consider regular alimony, child support, or separate maintenance payments. A creditor may ask you to prove you have received this income consistently. 

You Also Have The Right To... 

* Have credit in your birth name (Mary Smith), your first and your spouse’s last name (Mary Jones), or your first name and a combined last name (Mary Smith-Jones). 
* Get credit without a cosigner, if you meet the creditor’s standards. 
* Have a cosigner other than your husband or wife, if one is necessary. 
* Keep your own accounts after you change your name, marital status, reach a certain age, or retire, unless the creditor has evidence that you’re not willing or able to pay. 
* Know whether your application was accepted or rejected within 30 days of filing a complete application. 
* Know why your application was rejected. The creditor must give you a notice that tells you either the specific reasons for your rejection or your right to learn the reasons if you ask within 60 days. 
* Acceptable reasons include: "Your income was low," or "You haven’t been employed long enough." Unacceptable reasons are: "You didn’t meet our minimum standards," or "You didn’t receive enough points on our credit-scoring system." Indefinite and vague reasons are illegal, so ask the creditor to be specific. 
* Find out why you were offered less favorable terms than you applied for—unless you accept the terms. Ask for details. Examples of less favorable terms include higher finance charges or less money than you requested 
* Find out why your account was closed or why the terms of the account were made less favorable unless the account was inactive or delinquent. 

Especially For Women - 

It is essential that a woman have a record of good credit in her own name. A woman often looses her credit history when she marries and changes her name, or when joint credit is reported only in the name of the husband. This creates a difficult situation for women who are married, divorced, separated, or widowed. You should contact the credit bureaus to make sure all relevant credit information is filed under your own name. 

What To Do If You Suspect Discrimination... 

* Complain to the creditor. Make it known you’re aware of the law. The creditor may find an error or reverse the decision. 
* Check with your state Attorney General to see if the creditor violated state equal credit opportunity laws. Your state may decide to prosecute the creditor. 
* Bring a case in federal district court. If you win, you can recover damages, including punitive damages. You also can obtain compensation for attorney’s fees and court costs. An attorney can advise you on how to proceed. 
* Join with others and file a class action suit. The group may recover punitive damages up to $500,000, or one percent of the creditor’s net worth, whichever is less. 
* Report violations to the appropriate government agency. If you’re denied credit, the creditor must give you the name and address of the agency to contact. 

The law does not guarantee that you will be granted credit, only that you will be considered without prejudice. You may not be denied credit based on subjective criteria or other personal criteria set by the creditor. Be aware of your rights and exercise them.

For more credit related acts, click on the links below:

[ Credit Main | Debt Collection Act | Equal Credit Opportunity | Credit Billing Act | Credit Repair ]
[ Credit Bureau | Credit Reporting ]

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