Timothy Harris
equal credit opportunity act

The Equal Credit Opportunity Act is a provision enforced by the Federal Trade Commission protecting consumers from abuse and discrimination based on personal characteristics.

That’s a fancy way of saying while lenders may ask questions about age, marital status, race, color, religion, national origin, gender and history of receiving public assistance, they are not allowed to base lending decisions on any of those factors.

In fact, you even have the option of not revealing any of that personal information if you don’t want to. Typically, these types of questions are voluntary and the information is used to enforce anti-discrimination laws in the U.S.

Since we use credit to buy so many things in the U.S. – cars, houses, services and more – receiving fair treatment across the board from creditors is vital.

Follow along for the full scoop on the equal credit opportunity act.

Your rights

The Equal Credit Opportunity Act limits what creditors can use when deciding whether to loan you money, as well as when setting the terms of your loan.

Creditors are not allowed to encourage you to not apply for a loan based on your revelation of information from any of the mentioned protected categories.

In the same way, the terms of a potential loan cannot change based on the information you provide voluntarily.

To protect yourself, you should request a free and complete copy of your credit report once per year from the three nationwide credit reporting companies. Having a copy of your report helps you better understand your credit situation and ensure you’re being treated fairly.

Who’s protected

As mentioned above, lenders cannot take into account your age, marital status, race, color, religion, national origin, gender and history of receiving public assistance. For example, if you’re single but were previously married, creditors cannot ask you to specify whether you’re single because of a divorce or because of the death of your spouse. Lenders should only ask whether you are “married or unmarried.”

However, there are instances where one of these factors could work in your favor. If you’re hunting for a senior-friendly apartment, you may receive adjusted loan terms if you’re 62 or older. This is called a reverse mortgage and it entails adjusted terms that benefit you if you qualify.

The Equal Credit Opportunity Act also protects individuals who are receiving public assistance. In the case of a loan, public assistance income is legally recognized as valid income.

What to do if you experience discrimination

Though lenders are frequently audited for violations against the Equal Credit Opportunity Act, there are undoubtedly situations where borrowers experience discrimination. Lenders either choose not to lend at all or alter the normal loan terms based on one of the protected categories.

If you believe this has happened to you, the best place to start is by contacting your state’s Attorney General’s office. Lenders are also required to give you contact information for the appropriate office to report a violation if they choose to deny your application for a loan for any reason.



About The Author

Timothy Harris

Timothy Harris is a freelance writer based in Albuquerque. He brings a professional background in event marketing, residential real estate and journalism to the table to provide useful and relevant content for the modern renter. Timothy has previously written content for Karsten & Associates in New Mexico and Up 'til Dawn, a philanthropic fundraiser that benefits St. Jude Children's Research Hospital.