Equal Credit Opportunity Act (ECOA)

The Equal Credit Opportunity Act (ECOA) prohibits credit discrimination on the basis of sex, race, marital status, religion, national origin, age (18 and over), or receipt of public assistance. Creditors may ask for this information (except religion) in certain situations, but may not use it to discriminate when deciding whether to grant credit.

The ECOA protects consumers who deal with companies that regularly extend credit, including banks, finance companies, retail and department stores, credit card companies, and credit unions.  Everyone who participates in the decision to grant credit, including real estate brokers who arrange financing, must follow this law.

The ECOA and Your Credit Report

If you feel that your credit report does not accurately reflect your creditworthiness, Regulation B, which implements the Equal Credit Opportunity Act, provides that you have the right to present information to a prospective creditor to show that your credit report does not reflect your ability or willingness to repay.  The creditor must consider this information at your request.  If you know there is adverse information on your credit report it is often best to explain the circumstances surrounding that item and provide other positive information to the creditor at the time you complete an application.  Our credit kit offers sample letters on getting information reported to your credit file.

Consumer’s rights under the ECOA:

(1)  You cannot be denied credit based on your race, sex, martial status, religion, age, or national origin;

(2)  You have the right to have reliable public assistance, child support, and alimony considered in the same manner as other income.  If you choose to not list it on the application, then you have the right to do so;

(3)  If you are denied credit, you have a legal right to know why.  The creditor is required to notify you in writing of the reason why you were denied credit and provide you with the name of the credit bureau used to evaluate your credit rating;

(4)  Lenders cannot require a co-signor (or joint applicant) when a person's income is adequate for the loan approval.  Also, a lender cannot automatically reject a woman's application just because she is a homemaker;

(5)  A woman can apply for a loan using either her married last name or her maiden last name (or hypenate it if she chooses).  A lender can only ask for a woman's marriage status in a community property state ( Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas and Washington).