Equal Credit Opportunity Act - Understanding How It Works For You

Credit is used by millions of American consumers to finance education, housing, car ownership and to finance their own business. Everybody is entitled to this freedom hence the Equal Credit Opportunity Act was developed. It guarantees that all American consumers are given an equal chance of obtaining a credit. This however does not mean that all American consumers who apply for credit will be approved. Things like income, expenses, debt and credit score based on credit history are considered in establishing a person’s creditworthiness.

This law protects consumers when dealing with any creditor who frequently extends credit such as banks, loan and finance companies, department stores and credit card companies. Real estate brokers who organize financing is also under this law. Enterprises that apply for credit are also protected by the Equal Credit Opportunity Act.

The Equal Credit Opportunity Act forbids creditors from marginalizing consumer credit applicants based on their race, color, religion, national origin, sex, marital status, age, or because an applicant accepts income from a public assistance program, or because a person exercised his right under the Consumer Credit Protection Act (without any ulterior motive).

In simplest terms, when a consumer is applying for a credit, a creditor or lender may not:

	Discourage a person from applying because of his age, marital status, national origin, race, sex or because he receives income via public assistance.
	Ask him to disclose his national origin, race, religion or sex. However, when applying for a real estate loan, a creditor may ask him to willingly reveal these information except for religion. This aids federal agencies implement anti-discrimination laws.
	Ask if he/she is widowed/widower or divorced. Only the terms married, unmarried or separated are allowed when permitted to ask the applicant.
	Ask about his marital status if applying for a split, unsecured account. Applicants residing in Arizona, California, Idaho, Nevada, Louisiana, Texas, New Mexico and Washington States may be asked to provide this information because these states are considered “community property states”. If applying for a joint account or one tenable by property, a creditor in any state may ask this of him.
	Request information about his/her spouse, except when his/her spouse is applying alongside; his/her spouse will be permitted to use the account; he/she is relying on the other spouse’s income, on alimony or child support income from a previous spouse; or if he lives in a “community property state“.
	Ask about plans to have children and or raising children.
	For women, ask if she obtains alimony, child support, or “separate maintenance payments“. A creditor may ask if alimony, child support, or separate maintenance payments have to be disbursed.

Furthermore, when deciding to give you credit, a creditor or lender may not:

	Judge your marital status, national origin, race, religion, or sex.
	Consider whether your name is listed in a telephone directory. A creditor however may consider if you have a phone.
	Ask if he/she is widowed/widower or divorced. Only the terms married, unmarried or separated are allowed when permitted to ask the applicant.
	Consider the neighborhood where you want to purchase, refinance, or develop a house with credit borrowed and the race of the people living in that neighborhood.
	Consider your age, unless:
	You are younger than 18 years of age you’re 62 or over 62 otherwise a creditor might favor you because of your age It has direct relationship with your credit worthiness: For example, a creditor could employ your age to decide if your income might plummet because you’re about to retire It’s utilized in an applicable scoring system that positively discriminates applicants age 62 and above.

Now, when it comes to appraising your income, a lender may not:

	Deny consideration of public assistance income.
	Deny consideration of your income because of your sex or marital status.
	Discount or reject application because your income comes from part-time employment, pension, annuity, or if your income comes from retirement settlement programs.
	Deny consideration of alimony, child support, or separate maintenance payments.

The main goal of Equal Credit Opportunity Act is found in the name itself - equality. Remember that as long as you are inquiring in good faith and is honest about your goals in applying for a credit, the creditor has no reason to be unjust, unfair and discriminating in his dealings toward you, the consumer. If discrimination is suspected, the first thing to do is complain to the creditor. Make the creditor aware that you are knowledgeable of the law.

You can also coordinate with your State Attorney General if laws were violated while dealing with the creditor. Complaints or concerns regarding all types of creditors may be forwarded to the Department of Justice, Civil Rights Division.