What is the Equal Credit Opportunity Act?

Getting and using credit seems to be an American pastime these days. You can use a credit card to pay for your meals at McDonald’s, and you can rarely make a hotel reservation without using a credit card. With skyrocketing prices, who pays cash for a car or a house?  It is common for an average person to carry a 30-year mortgage, a car loan, and a few thousand dollars in credit card debt. Therefore, with the importance of credit in our society, it is essential that you are knowledgeable about your rights to obtaining credit.
The Equal Credit Opportunity Act (ECOA) guarantees that all people and businesses have an equal chance to obtain credit. This law protects you when you are trying to get credit, whether you are dealing with a bank, a credit card agency, a mortgage company, a finance company, or a department store to get that credit. Plus, the ECOA applies to all kinds of credit, including mortgages, car loans, personal loans, and credit cards. 
Basically, the ECOA makes sure that a bank doesn’t illegally discriminate against you in applying for or getting credit. A bank cannot discourage you from applying for credit, or even ask for, your sex, race, age, religion, or national origin, in your credit application. The ECOA also prohibits banks from asking whether you receive public assistance, or discouraging you from filling out a credit application because you receive public assistance. 
Likewise, the ECOA prevents banks from asking you if you are widowed or divorced. If you are applying for credit in your name alone, then the bank cannot ask you if you are married, or for information about your spouse. The only exceptions to this rule are if you live in a community property state, such as Arizona or California, or if you are applying for credit jointly with your spouse. The bank is also not permitted to ask you about your children, or if you intend to have children. Furthermore, you don’t have to tell the bank about any child support, maintenance, or alimony payments that you receive, if you don’t want to use that income as a basis for getting credit. 
Besides these rules for applying for credit, the ECOA also prohibits the bank from considering similar factors when deciding whether to give you credit. While a bank can deny you credit because it doesn’t think that you are a good credit risk, maybe because you have filed for bankruptcy in the past, or don’t have a strong credit history, a bank cannot deny you credit because of who you are. Thus, a bank cannot deny you credit based on your sex, race, age, religion, or national origin. A bank also cannot look at whether you have a telephone listing, or the racial composition of the neighborhood where you want to buy a home using credit. The bank cannot consider your age, either, unless you’re too young to a sign a contract (usually, under age 18), or if you will receive more favorable treatment because you are 62 years of age or older. 

The information on this page is meant to provide a general overview of the law. The laws in your state and/or city may deviate significantly from those described here. If you have specific questions related to your situation you should speak with a local attorney.

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