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Equal
Credit Opportunity
Act
ECOA
Source:
Federal Trade Commision
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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