Equal Credit Opportunity

The Equal Credit Opportunity Act

Before 1975, when the Equal Credit Opportunity Act became effective, a considerable number of Americans — women, older people and minority group members — often had difficulty in obtaining loans and credit. Since then, discrimination on these bases has been forbidden by law. Prospective lenders no longer have the right even to ask borrowers about their race, religion or nationality — except, for monitoring purposes, in the case of real estate loans, and even in this case, the borrower is under no obligation to respond. Older people cannot be rejected on the grounds that their age prevents them from obtaining credit insurance and in determining their financial status, prospective lenders must take into account such various sources of income as Social Security, annuities and pension payments.

Perhaps most dramatic are the changes the law has brought about in the treatment of women. In the past, married women often could not get credit unless their husbands acted as co-signers; unmarried women were often held to much more rigid credit tests than men; young married women without children were often turned down on the grounds that when — and if — they became mothers, they would no longer be acceptable credit risks. Under the provisions of the Equal Credit Opportunity Act, all these forms of discrimination are outlawed. Specifically, the law provides that:

  • A lender may not reject a female applicant for credit because of her sex or marital status, and any woman whose application is denied has the right, within 60 days, to ask for the reasons in writing. A lender who refuses to supply this information is subject to court suit and could be forced to pay the plaintiff’s actual charges plus punitive damages, attorney fees and court costs.
  • In applying for credit, married women may use their maiden names, if they choose.
  • Divorced or legally separated women are not obliged to list such sources of income as child support and alimony when applying for credit. But those who believe that mention of these resources will improve their chances of getting the money can do so, and although prospective lenders are entitled to determine if these sources of income are reliable, they must be taken into consideration when making a decision.
  • A lender may not ask a woman whether she intends to have children.
  • A lender can ask a woman’s husband to co-sign a loan only when it is clear that her income alone is insufficient or when property jointly held is to be used as collateral.
  • Lenders may not ask women about their marital status except in states with community property laws — specifically, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas and Washington — where the spouse can use the account or will be contractually liable for it, or where the spouse’s income is used to help qualify for the loan.

Lenders who violate the Equal Credit Opportunity Act are subject to severe penalties, including actual damage, up to $10,000 in punitive damages along with attorney fees and court costs.

Violation of the law can be difficult to prove, especially in cases where the applicant’s credit-worthiness can be considered marginal, whether because of a relatively low income or a short period of employment or residence in the community. Under the terms of the law, applicants who are rejected for credit must be given the reasons for this action in writing. If, after you have examined the lender’s statement, you remain convinced that you are the victim of discrimination, the next step is to write a letter describing the situation in full. Your complaints about commercial banks should go to the nearest regional office of the Federal Reserve System.

  • Complaints about federally insured savings and loan associations should go to: General Counsel, Federal Home Loan Bank Board, 1700 G Street, NW, Washington, D.C. 20552.
  • Complaints about credit unions should go to: National Credit Union Administration, 1776 G Street, NW, Washington, D.C. 20456.
  • Complaints about credit card companies, finance companies and retail stores should go to: Federal Trade Commission, Equal Opportunity Division, Washington , D.C. 20580 .
  • Or, if you prefer, you can send your complaints — no matter what kind of lending agency is involved — to your state’s consumer protection office or attorney general’s office.


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