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Equal Credit Opportunity Act: What Creditors Cannot Do

Last Updated: November 30, 2017

Whether you’re trying to repair your credit, or maintain the good credit you already have, you need to know your rights when it comes to credit approval. The Equal Credit Opportunity Act is a 1974 law that protects consumers from credit discrimination. It’s pretty straightforward, prohibiting discrimination based on race, color, religion, national origin, sex, marital status, or age. But there’s plenty of fine print that requires a deeper understanding. Here’s a summary of what you need to know.

Who must comply with the ECOA

Generally speaking, any entity or person that extends credit must comply with the Equal Credit Opportunity Act. More specifically, the FTC states that the law applies to "banks, small loan and finance companies, retail and department stores, credit card companies, and credit unions. Everyone who participates in a decision to grant credit or in setting the terms of that credit, including real estate brokers who arrange financing, must comply with the ECOA."

In this article, those who must comply with the ECOA will be referred to as creditors, with the understanding that it refers to all of the specific entities (or individuals) listed above.

What the ECOA says creditors cannot do

Creditors cannot deny you credit — or determine credit terms — based on:

That said, the ECOA makes clear that these topics are not completely off-limits to creditors, meaning inquiries may still be made under certain circumstances.

In the fine print

Race, sex, and national origin

The FTC says you may be asked your race, sex, and national origin to help the government detect discrimination. However, you are not required to answer and, if you do, this information cannot be used to discriminate against you.

Note, national origin should not be confused with immigration status, as a creditor can use that information to determine whether the length of time you will be in the U.S. will be sufficient to pay off the debt.

Marital status

The ECOA can ask about marital status if you:

Note, wording is very important. They cannot ask if you are divorced or widowed; their only options are married, unmarried, or separated. You also cannot lose credit accounts just because your marital status changes.

Spouse

The ECOA can ask about your spouse if you:

Children

The ECOA cannot ask about your plans for future children, but can ask about expenses specific to the dependent children you already have.

Age

The ECOA says creditors can ask your age, but may only use it as a determining factor if:

You also cannot lose a credit account just because you reach a certain age or retire.

Income

Obviously, creditors are going to consider your income. But what creditors cannot do is discriminate about the following types of income they will consider.

Creditors cannot refuse to consider income from:

Credit assistance programs

Creditors may refuse to extend credit if you are enrolled in a credit assistance program "if such refusal is required by or made pursuant to such program."

equal opportunity act

What the ECOA says creditors must do

After you submit an application for credit, the creditor must:

You have the right to get credit:

Red flags

According to the Consumer Financial Protection Bureau (CFPB), credit discrimination isn’t always easy to spot, or even intentional. But there are red flags that the CFPB says to be on the lookout for:

What creditors can consider

When deciding whether to extend credit to you – and the terms of that credit — creditors can consider your credit, income, expenses, debt, debt-to-income ratio, and whether you have collateral necessary to secure a loan (if applicable).

How to file a complaint

Do you believe a creditor has discriminated against you based on your race, color, religion, national origin, sex, marital status, age, or income source? The FTC and Consumer Financial Protection Bureau want to hear about it. Submit a complaint to the FTC here and the CFPB here.

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