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Equal
Credit Opportunity
Creditor
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Credit
is used by millions of consumers to finance an education or a house,
remodel a home, or get a small business loan.
The Equal Credit Opportunity Act
(ECOA) ensures that all consumers are given an equal chance to obtain
credit. This doesn’t mean all consumers who apply for credit get it:
Factors such as income, expenses, debt, and credit history are
considerations for creditworthiness.
The law protects you when you deal with
any creditor who regularly extends credit, including banks, small loan
and finance companies, retail and department stores, credit card
companies, and credit unions. Anyone involved in granting credit, such
as real estate brokers who arrange financing, is covered by the law.
Businesses applying for credit also are protected by the law.
When You Apply For Credit, 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.
When
Deciding To Give You Credit, A Creditor May Not...
- Consider your sex, marital status,
race, national origin, or religion.
- 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.
A Special Note To Women
A good credit
history—a record of how you paid past bills—often is necessary to
get credit. Unfortunately, this hurts many married, separated, divorced,
and widowed women. There are two common reasons women don’t have
credit histories in their own names: they lost their credit histories
when they married and changed their names; or creditors reported
accounts shared by married couples in the husband’s name only.
If you’re married, divorced,
separated, or widowed, contact your local credit bureau(s) to make sure
all relevant information is in a file under your own name.
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
punative 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. You may recover punitive damages for the group of
up to $500,000 or one percent of the creditor’s net worth, whichever
is less.
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