Equal Credit Opportunity Act

EQUAL CREDIT OPPORTUNITY ACT TEXT What is the Equal Credit Opportunity Act? Enacted in 1974, the Equal Credit Opportunity Act is a federal law that makes it unlawful for creditors to discriminate against applicants, with respect to any credit transaction, on the basis of color, race, religion, national origin, sexual orientation, gender, age or marital status. Additionally, the Equal Opportunity Act prohibits credit discrimination for all applicants whose primary income is derived thru public assistance. The only factors a credit provider can use to determine an applicant’s credit worthiness are their income, their debt to credit ratio, their expenses and their credit history. The laws codified under the Equal Opportunity Act of 1974 will apply to any individual or entity who, in the course of ordinary business, frequently participates in credit transactions or decisions. Retailers, banks, bankcard companies, financial institutions, credit unions will fall under this category. The Equal Opportunity Act of 1974 is enforced by the Federal Trade Commission—the country’s consumer protection agency. The law offers protections whenever an applicant deals with any individual or organization that regularly extend lines of credit. Retail and department stores, small loan offices, finance companies, credit unions and banks must adhere to the provisions of the equal opportunity act. Provisions of the Equal Opportunity Act: When you apply for a Line of Credit, a Creditor May Not do the Following: • According to the Equal Opportunity Act, a creditor may not apply or reject your application for credit based on your national origin, race, color, religion, sex, sexual orientation, age, marital status or because you receive public assistance. • A creditor may not consider your sex, national origin, or race, even though you may be asked to disclose such information. This information is only used to assist federal agencies in their enforcement of anti-discrimination laws. Creditors may consider your immigration status and whether you possess the right to reside in the country long enough to fulfill your debt obligations. • Creditors under the Equal Opportunity Act of 1974 may not impose different conditions or terms (i.e. higher fees or interest rates) on loans or extensions of credits on the basis of an applicant’s color, race, religion, sex, marital status, sexual orientation, age, or because the applicant receives public assistance. • Creditors cannot ask the applicant if he/she is widowed or divorced. Creditors may only use the terms: married, unmarried or separated. • Creditors cannot inquire about the applicant’s marital status if the individual is applying for a separate, unsecured line of credit. Creditors may only ask these questions in “community property states”: Wisconsin, Washington, Texas, New Mexico, Nevada, Louisiana, Idaho, California and Arizona. Creditors in any state may ask this information if the applicant applies for a joint account or one that is secured by property. • The only time a creditor may seek information concerning your spouse is when: o Your spouse is applying for credit with you o Your spouse is allowed access to the account o You are relying on your spouse’s income to fulfill the loan obligation o You live in the aforementioned community property states • Creditors may not ask you about your plans to have or raise children, but they may ask you questions regarding your child-rearing expenses • Creditors, according to the Equal Opportunity Act, may not ask if you receive alimony payments, child support assistance or separate maintenance payments. The creditor may only ask such questions if you rely on these payments to secure and subsequently pay-off your credit obligation. When deciding to accept your Application or Set the Terms of your Credit, a Creditor May not: • Creditors, when the setting the terms of your line of credit, cannot consider your color, race, religion, sex, marital status, national origin or whether you receive public assistance. • A creditor, according to the equal opportunity act of 1974, may only evaluate your age when”: o You are under the age of 18 and deemed too young to sign contracts o You are over the age of 62 (creditor will favor you because of your age) o Your age is used to determine the meaning of other variables that are important to your creditworthiness When evaluating your Income, A Creditor May not: • According to the Equal Opportunity Act, a creditor may not refuse to extend a line of credit if your rely on public assistance income to pay bills or purchase necessities • Creditors may not discount income because of your gender or marital status. • The Equal Opportunity Act of 1974 states that a creditor may not refuse to consider your application if rely on child support, separate maintenance payments or alimony. A creditor may only ask you for proof that you consistently receive this form of income. • Creditors may not refuse or discount your income because it is derived from social security, annuities, pensions or part-time employment. All Credit Seekers possess the Following Rights under the Equal Opportunity Act: • Seek credit without a cosigner, if you meet the standards of the creditor • Have credit transferred in your birth name, your first name and a combined last name and your first and your spouse’s last name • You can keep your accounts after you change your name, reach a certain age, marital status or retire, unless your creditor has the evidence that you are not willing or able to pay • Know why your application was rejected. Creditors must specifically tell you’re the reason for the rejection within 60 days of your application filing. Acceptable reasons for rejection include: “income is too law”, or that “you haven’t been employed long enough.” Unacceptable reasons might be “you did not meet our minimum standards for credit.” • You have the right to learn the specific reason as to why you were offered a less favorable term than what you applied for What to do if you have been discriminated against: • If you feel that a creditor violated the provisions of the Equal Opportunity Act and in turn, acted in a discriminatory manner, you must take the following steps: o Complain to the creditor that you have been discriminated against. Sometimes you will be able to persuade creditors to reconsider your application for credit o Check with your state’s Attorney General’s Office to determine if your prospective creditor violated your state’s equal opportunity laws o Report all violations to the appropriate government agencies. If you are denied credit, the creditor must supply you with the name and address of the agency to contact o Consider taking legal action against the creditor in a federal district court. If you win the case, you can obtain a punitive award if the court views the creditor’s actions as willful. You may also consider finding other people who share a common feud or problem with the creditor to file a class action suit. o All creditors must comply with the provisions of the federal equal opportunity act and their coordinating state’s interpretation of the laws. Failure to adhere with the Equal Opportunity Act’s Regulation B can subject a lending institution to civil liability for the punitive and actual damages in individual and class-action suits. Liability for punitive damages can amass to $10,000 for individual suits and the lesser of $500,000 or 1% of the lending institution’s net worth in a class action suit.