The Equal Credit Opportunity Act (ECOA) ensures that all consumers are given an equal chance to obtain credit. The law protects consumers when they apply for financing with any creditor who regularly extends credit, including banks, finance companies, retail and department stores, credit card companies, and credit unions.
When a consumer applies for credit, a creditor MAY NOT:
- Discourage them from applying because of their sex, race, national origin, marital status, age, or because they receive public assistance.
- Ask them to reveal their sex, race, national origin, or religion. The creditor may ask the consumer to voluntarily disclose this information (except for religion) if they are applying for a real estate loan.
- Ask the consumer if they are widowed or divorced. When permitted to ask marital status, a creditor may only use the terms: married, unmarried, or separated.
- Ask about their marital status if they are applying for a separate, unsecured account. A creditor may ask them to provide this information if they live in a "community property" state. These states include: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, and Washington. A creditor in any state may ask for this information if they apply for a joint account or one secured by property.
- Request information about their spouse, except when their spouse is applying with them; their spouse will be allowed to use the account; they are relying on their spouse's income or on alimony or child support income from a former spouse.
- Inquire about their plans for having or raising children.
When deciding to give a consumer credit, a creditor MAY NOT:
- Consider their sex, marital status, race, national origin, or religion.
- Consider whether they have a telephone listing in their name. A creditor may consider whether they have a phone.
- Consider the race of people in the neighborhood where the consumer wants to buy, refinance or improve a house with borrowed money.
- Consider their age, unless:
- they are too young to sign contracts, generally younger than 18 years of age,
- it's used to determine the meaning of other factors important to creditworthiness, or
- it's used in a valid scoring system that favors applicants age 62 and older.
When evaluating a consumer's income, a creditor MAY NOT:
- Refuse to consider public assistance income the same way as other income.
- Discount income because of their sex or marital status.
- Discount or refuse to consider income because it comes from part-time employment or pension, annuity, or retirement benefits programs.
- Refuse to consider regular alimony, child support, or separate maintenance payments. A creditor may ask them to prove they have received this income consistently.
Consumers also have the right to:
- Have credit in their birth name (Jane Jones), their first and their spouse's last name (Jane Smith), or their first name and a combined last name (Jane Jones-Smith.)
- Get credit without a cosigner, if they meet the creditor's standards.
- Have a cosigner other than their husband or wife, if one is necessary.
- Keep their own accounts after they change their name, marital status, reach a certain age, or retire, unless the creditor has evidence that they are not willing or able to pay.
- Know whether their application was accepted or rejected within 30 days of filing a complete application.
- Know why their application was rejected. The creditor must give them a notice that tells them either the specific reasons for their rejection or their right to learn the reasons if they ask within 60 days.
- Find out why they were offered less favorable terms than they applied for - unless they accept the terms.
- Find out why their account was closed or why the terms of the account were made less favorable unless the account was inactive or delinquent.