Federal law gives you protections when you deal with any organizations or people who regularly extend credit. That includes, for example, banks, small loan and finance companies, retail and department stores, credit card companies, and credit unions. Everyone who participates in the decision to grant credit or in setting the terms of that credit, including real estate brokers who arrange financing, must comply with the Equal Credit Opportunity Act (ECOA). Show
Your Equal Credit Opportunity RightsThe Equal Credit Opportunity Act (ECOA) makes it illegal for creditors (also known as banks, mortgage companies, small loan and finance companies, credit unions, retail and department stores, credit card companies, other online companies offering credit, and people who arrange for credit) to discriminate against you. The discrimination prohibition of this law applies to every part of the credit process: when you’re seeking credit, when a creditor evaluates your income, and when a creditor makes credit decisions. There are many forms of credit discrimination, and some forms are harder to spot than others. To make it more challenging, creditors often must ask about (and consider) information that is deeply personal — like your income, expenses, debts, and credit history. And, the federal government encourages creditors to collect certain information that may seem discriminatory — for example, race, ethnicity, and age. But this information helps the government keep statistics that fight discrimination. Below are some examples of what is (and what is not) illegal credit discrimination under the ECOA. When Is It Credit Discrimination?To ensure equal access to credit, creditors must not consider certain factors when making a credit determination. These factors include
During the application process or when making a credit decision, a creditor
When evaluating your income, a creditor
You Have Other Important RightsWhen you get credit, you have the right to
If You Suspect Credit Discrimination
Building and Protecting Your Credit HistoryA good credit history — a record of how you pay your bills and if you pay on time — often is necessary to get credit. This can be hard for young people to establish when they’re just starting out and don’t have a history of paying their own bills. The same problem can happen to some people who changed their legal name — due to marriage, separation, divorce, death of a spouse, or gender transition. When you build a credit record under one name, but then legally change your name, it may appear that you don’t have a credit history in your own name. If you legally changed your name — after getting married, separated, divorced, widowed, or transitioning: Contact the credit bureaus to make sure all relevant bill payment information is in a file under your current name. Your credit report includes information on where you live, how you pay your bills, and whether you’ve filed for bankruptcy. Nationwide credit bureaus sell the information in your report to creditors, insurers, employers, and other businesses that, in turn, use it to evaluate your applications for credit, insurance, employment, or renting a home. The Fair Credit Reporting Act (FCRA) entitles you to a free copy of your credit report from each of the three nationwide credit bureaus — Equifax, Experian, and TransUnion — once every 12 months, if you ask. You can get the reports all at once or stagger your requests to keep an eye on things throughout the year. Always review your reports carefully and correct any mistakes.
Through the pandemic, everyone in the U.S. can get a free credit report each week from all three nationwide credit bureaus (Equifax, Experian, and TransUnion) at AnnualCreditReport.com. Also, everyone in the U.S. can get six free Equifax credit reports per year through 2026 by visiting the Equifax website or by calling 1-866-349-5191. That’s in addition to the one free Equifax report (plus your Experian and TransUnion reports) you can get at AnnualCreditReport.com. Which of the following is the best approach to refusing requests?Which of the following is the most ideal approach to refusing requests? Find a fair and reasonable explanation for your refusal.
When refusing credit What should you avoid including?When refusing credit, you must be careful to avoid disclosures that may lead to lawsuits. Share only enough information to clarify the reason the credit has been refused then encourage the customer to continue on a cash basis. See p. 190.
Which of the following is the most effective statement in a letter to a customer denying credit?Which is the most effective statement in a letter to a customer denying credit? Please take your business elsewhere. Perhaps if you were a more stable and responsible person, we would be able to grant you credit.
Which of the following is recommended while providing refusals in a message?Which of the following is recommended while providing refusals in a message? A. De-emphasize the refusal by placing it in a different paragraph from that of the reason.
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