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US Federal Trade Commission: ecoa

US Federal Trade Commission: ecoa

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Published by: ftc on Jan 21, 2008
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03/21/2014

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FTC Facts
For Consumers
Federal Trade CommissionFor The Consumer
www.ftc.gov 1-877-ftc-help
Equal Credit Opportunity 
C
redit is used by millions of consumers to financean education or a house,remodel a home, or get a smallbusiness loan.e Equal Credit Opportunity  Act (ECOA) ensures that allconsumers are given an equal chanceto obtain credit. is doesn’t meanall consumers who apply for creditget it: Factors such as income,expenses, debt, and credit history areconsiderations for creditworthiness.e law protects you when you deal with any creditor who regularly extends credit, includingbanks, small loan and finance companies, retail anddepartment stores, credit card companies, and creditunions. Anyone involved in granting credit, such asreal estate brokers who arrange financing, is coveredby the law. Businesses applying for credit also areprotected by the law.
When You Apply For Credit,A Creditor May Not...
Discourage you from applying because of yoursex, marital status, age, race, national origin, orbecause you receive public assistance income.
Ask you to reveal your sex,race, national origin, orreligion. A creditor may ask you to voluntarily disclosethis information (except forreligion) if you’re applyingfor a real estate loan. isinformation helps federalagencies enforce anti-discrimination laws. You may be asked about your residenceor immigration status.
Ask if you’re widowed or divorced. Whenpermitted to ask marital status, a creditormay only use the terms: married, unmarried,or separated.
Ask about your marital status if you’re applyingfor a separate, unsecured account. A creditormay ask you to provide this information if youlive in “community property” states: Arizona,California, Idaho, Louisiana, Nevada, New Mexico, Texas, and Washington. A creditorin any state may ask for this information if you apply for a joint account or one securedby property.
Request information about your spouse, except when your spouse is applying with you; yourspouse will be allowed to use the account;
March 1998
 
2 FTC Facts
For Consumers
you are relying on your spouse’s income or onalimony or child support income from a formerspouse; or if you reside ina community property state.
Inquire about your plansfor having or raisingchildren.
Ask if you receivealimony, child support,or separate maintenance payments, unless you’refirst told that you don’t have to provide thisinformation if you won’t rely on these paymentsto get credit. A creditor may ask if you haveto pay alimony, child support, or separatemaintenance payments.
When Deciding To Give YouCredit, A Creditor May Not...
Consider your sex, marital status, race, nationalorigin, or religion.
Consider whether you have a telephone listing inyour name. A creditor may consider whether youhave a phone.
Consider the race of people in the neighborhood where you want to buy, refinance or improve ahouse with borrowed money.
Consider your age, unless:you’re too young to sign contracts, generally younger than 18 years of age;you’re 62 or older, and the creditor will favoryou because of your age;it’s used to determine the meaning of otherfactors important to creditworthiness. Forexample, a creditor could use your age todetermine if your income might drop becauseyou’re about to retire;it’s used in a valid scoring system that favorsapplicants age 62 and older. A credit-scoringsystem assigns points toanswers you provide to creditapplication questions. Forexample, your length of employment might be scoreddifferently depending onyour age.
When Evaluating YourIncome, A Creditor May Not...
Refuse to consider public assistance income thesame way as other income.
Discount income because of your sex or maritalstatus. For example, a creditor cannot count aman’s salary at 100 percent and a woman’s at 75percent. A creditor may not assume a womanof childbearing age will stop working to raisechildren.
Discount or refuse to consider income because itcomes from part-time employment or pension,annuity, or retirement benefits programs.
Refuse to consider regular alimony, childsupport, or separate maintenance payments. A creditor may ask you to prove you have receivedthis income consistently.
You Also Have The Right To...
Have credit in your birth name (Mary Smith),your first and your spouse’s last name (Mary  Jones), or your first name and a combined lastname (Mary Smith-Jones).
Get credit without a cosigner, if you meet thecreditor’s standards.
Have a cosigner other than your husband or wife, if one is necessary.
 A creditor may ask if you are required to make alimony payments.
 
FTC Facts
For Consumers
3
Keep your own accounts after you change yourname, marital status, reach a certain age, orretire, unless the creditor has evidence that you’renot willing or able to pay.
Know whether your application was acceptedor rejected within 30 days of filing a completeapplication.
Know why your application was rejected. ecreditor must give you a notice that tells youeither the specific reasons for your rejection oryour right to learn the reasons if you ask within60 days.
Acceptable reasons include: “Your income was low,” or “You haven’t been employed longenough.” Unacceptable reasons are: “You didn’tmeet our minimum standards,” or “You didn’treceive enough points on our credit-scoringsystem.” Indefinite and vague reasons are illegal,so ask the creditor to be specific.
Find out why you were offered less favorableterms than you applied for—unless you acceptthe terms. Ask for details. Examples of lessfavorable terms include higher finance charges orless money thanyou requested.
Find out why your account was closed or why the terms of the account were made lessfavorable unless the account was inactive ordelinquent.
A Special Note To Women
 A good credit history—a record of how youpaid past bills—often is necessary to get credit.Unfortunately, this hurts many married, separated,divorced, and widowed women. ere are twocommon reasons women don’t have credit historiesin their own names: they lost their credit histories when they married and changed their names; orcreditors reported accounts shared by marriedcouples in the husband’s name only.If you’re married, divorced, separated, or widowed, contact your local credit bureau(s) to makesure all relevant information is in a file under yourown name.
If You Suspect Discrimination...
Complain to the creditor. Make it known you’reaware of the law. e creditor may find an erroror reverse the decision.
Check with your state Attorney General tosee if the creditor violated state equal creditopportunity laws. Your state may decide toprosecute the creditor.
Bring a case in federal district court. If you win,you can recover damages, including punativedamages. You also can obtain compensation forattorney’s fees and court costs. An attorney canadvise you on how to proceed.
Join with others and file a class action suit. Youmay recover punitive damages for the group of up to $500,000 or one percent of the creditor’snet worth, whichever is less.
Report violations to the appropriate governmentagency. If you’re denied credit, the creditor mustgive you the name and address of the agency to contact. While some of these agencies don’tresolve individual complaints, the informationyou provide helps them decide which companiesto investigate. A list of agencies follows.If a retail store, department store, small loan andfinance company, mortgage company, oil company,

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