Equal Credit Opportunity
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.
- 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. While some of these agencies don’t
resolve individual complaints, the information you
provide helps them decide which companies to investigate.
A list of agencies follows.
If a retail store, department store,
small loan and finance company, mortgage company, oil
company, public utility, state credit union, government
lending program, or travel and expense credit card company
is involved, contact:
Consumer Response Center
Federal Trade Commission
Washington, DC 20580.
The FTC cannot intervene in individual
disputes, but the information you provide may indicate
a pattern of possible law violations that require action
by the Commission.
If your complaint concerns a nationally-chartered
bank (National or N.A. will be part of the name), write
to:
Comptroller of the Currency
Compliance Management
Mail Stop 7-5
Washington, DC 20219
If your complaint concerns a state-chartered
bank that is insured by the Federal Deposit Insurance
Corporation but is not a member of the Federal Reserve
System, write to:
Federal Deposit Insurance Corporation
Consumer Affairs Division
Washington, DC 20429
If your complaint concerns a federally-chartered
or federally-insured savings and loan association, write
to:
Office of Thrift Supervision
Consumer Affairs Program
Washington, DC 20552
If your complaint concerns a federally-chartered
credit union, write to:
National Credit Union Administration
Consumer Affairs Division
Washington, DC 20456
Complaints against all kinds of creditors
can be referred to:
Department of Justice
Civil Rights Division
Washington, DC 20530
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