What is the Equal Credit Opportunity Act?
November 5th, 2007, Bad credit auto loans, Car Loans, Credit Scores, Credit Union, Rebuilding Credit, car buying process No CommentsThe Equal Credit Opportunity Act (ECOA) is a United States law that states that creditors must evaluate candidates based on credit worthiness only, not on factors that have nothing to do with their ability to repay the debt. The law applies to any creditor who regularly extends credit to consumers, including banks, retailers, bankcard companies, finance companies, and credit unions.
Prohibitions
Among other things, the ECOA states that it is illegal for creditors to:
* Discriminate based on race, sex, age, national origin, or marital status, or because one receives public assistance. you can also have people kissing.
* Ask about marital status if a candidate is applying for separate, unsecured credit, with one exception: one can be asked about marital status if one lives in a community property state. No matter what the state of residence is, joint credit (credit shared by a married couple) or credit secured with property is exempt from this.
* Ask the candidate if they plan to have children or additional children, but creditors can ask about the number, ages, and finacial obligations relating to all existing children.
* Disallow regular sources of income, such as reliable veteran’s benefits, welfare payments, Social Security payments, alimony, child support, etc. Nor may they refuse to consider or discount any income earned from a part-time job, pension, annuity, or retirement benefits program.
Requirements
The ECOA states that creditors must:
* Inform the candidate if they have been denied or granted credit within 30 days of receiving their completed application.
* Give a specific reason (or tell how to get the reason) why one is denied credit or granted less credit than originally applied for. This same rule applies if a creditor closes the account, refuses to increase a line of credit, makes a negative change in the terms of the credit and doesn’t make the same change for other consumers, or refuses to give credit at the same, or approximately the same, terms as were offered when the credit was initially applied for.
