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Equal Credit Opportunity Act

Unfortunately, there are still companies that discriminate based on age, race, gender, religion, marital status, country of origin, or in other ways. Some of these companies will not give you credit if you do not meet criteria that might be discriminating. If you feel that you have been denied credit based on the above characteristics, you have recourse under the Equal Credit Opportunity Act (ECOA).

Protections offered by the Equal Credit Opportunity Act

The Equal Credit Opportunity Act offers some very real protection against discrimination in terms of whether or not you get credit. Here are some ways that ECOA protects you:

Information that cannot be used in determining whether you get credit includes your marital status, your race and/or country of origin, age, religion or sex. Companies can ask for this information, in order to put together demographic data, but they cannot use it as part of the decision about your credit application.

There is some information that companies can use when it comes to deciding whether or not you get the credit you apply for. The information that lenders can use include the following:

  • Income: It is alright for lenders to decide whether or not to give you credit based on how much money you make.
  • Payment history: Creditors can look at your payment history and decide whether or not they want to give you a loan. This information lets them know if you can be counted upon to make your payments as agreed.
  • Debt-to-income ratio: Lenders are allowed to decide whether or not you have too much debt for your income. This is done in case you have such a high debt load that the payments would overwhelm you.
  • Length of credit history: Creditors can decide that you do not have a long enough credit history established to justify the risk of lending you money.
  • Negative items: Things like bankruptcies and loan defaults can be used in decisions about your credit application. Lenders can decide that you are too irresponsible for credit. However, it is important to note that these negative items are removed from your credit file after seven to ten years.

You have the right to know why you were denied credit. If you have been denied credit, ECOA says that you have the right to know why the company decided not to issue you credit. If you have been denied credit, you can ask for the specific reasons that your application was denied. You can then check to see if the reasons are valid.

Public assistance must be considered as income. In some cases, creditors have been known to not accept public assistance as a type of income. However, the Equal Credit Opportunity Act requires regular and reliable public assistance to be counted as household income. This means that lenders must include regular Social Security, Disability and other types of public assistance as your income.

Businesses have these rights as well. Sometimes, a business needs to apply for credit. The ECOA grants businesses the same protections that individuals have when applying for credit.

Credit is one of the most important aspects of your personal finances. It is important to build good credit, and to make sure that your financial reputation remains intact. One of the best ways to do this is to use credit wisely, and to make sure that you know your consumer rights with regard to credit applications and credit reporting.

You can find more information about the Equal Credit Opportunity Act and other aspects of consumer protection by visiting the Web site for the Federal Trade Commission at

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