Equal Credit Opportunity Act

  • October 6, 2016
  • By: Greenpath Financial Wellness

The Equal Credit Opportunity Act prohibits credit discrimination based on:

  • Race
  • Color
  • Religion
  • National origin
  • Sex
  • Marital status
  • Age

Lenders may ask you about these things. But they can’t use this when making decisions about your credit.  They must decide based on factors like income, expenses, debts and credit history.

Basics of ECOA

When you apply for credit, lenders may not:

  • Prevent you from applying or reject you based on who you are. They also may not use this information to decide terms of credit, like fees or interest rate.
  • Ask if you’re widowed or divorced. The lender can only use the terms “married,” “unmarried,” or “separated.”
  • Inquire about your marital status if you’re applying for a separate, unsecured account.  You might have to provide this information if you live in a community property state.
  • Ask for about your spouse, except:
    • Whether your spouse is applying with you
    • If your spouse will be allowed to use the account
    • To determine if you rely on your spouse’s income or on alimony or child support income from a former spouse
  • Question you about your plans for children. They can ask questions about expenses related to your children.

Your Income

Lenders may not:

  • Refuse to deem welfare the same as other income.
  • Ignore income because of your sex or marital status. A lender can’t count a man’s salary at 100 percent and a woman’s at 75 percent. A lender may not assume that a woman will stop working to raise children.
  • Disregard income because it comes from part-time employment, Social Security, or pensions.
  • Ignore alimony or child support. A lender may ask you for proof that you receive this income steadily.

Additional Rights

You also have the right to:

  • Get credit without a cosigner if you meet their standards.
  • Have a cosigner other than your spouse.
  • Keep your own accounts after major life events.
  • Know if your application was accepted within 30 days of applying.
  • Be told why you were rejected.  The lender must tell you the specific reason for the rejection. You have to ask within 60 days of rejection. A reason might be your income was too low.  An improper reason might be “you didn’t meet our standards.”  That isn’t specific enough.