Know Your Rights: Credit Discrimination Is Illegal

Under federal law, lenders are not allowed to discriminate against you. When you apply for credit or borrow money, it is against the law to discriminate because of:

  •  Race
  •  Color
  •  Religion
  •  National origin
  • Sex (including gender)*
  • Marital status
  • Age
  • Receiving money from public assistance

Lenders are allowed to ask you for this type of information in some situations, but they can’t discourage you from applying for credit. And, they can’t reject your application for any of the reasons on the list—or for exercising your rights under certain consumer protection laws. Lenders are not allowed to charge higher costs, like a higher interest rate or higher fees, for these reasons either.

The ECOA applies to all forms of credit, including:

  • Car loans
  • Credit cards
  • Home loans
  • Student loans
  • Small business loans

Within limits, lenders are allowed to consider other factors, such as income, debt, and credit history, when they decide whether to offer you credit and what terms to offer you.

You are protected under the Equal Credit Opportunity Act (ECOA)

ECOA was enacted in 1974. It makes credit discrimination illegal and holds lenders responsible if they break the law. Many parts of the U.S. government enforce the law—including the CFPB as well as the Office of the Comptroller of the Currency, Federal Reserve Board, Federal Deposit Insurance Corporation, National Credit Union Administration, Department of Justice, and Federal Trade Commission.

Protect yourself from discrimination

Do your research
Shop around. Learn about the benefits and risks of the loan or credit card you want. Research current interest rates. Compare offers from several lenders. You can more easily spot if someone is trying to take advantage of you if you have facts on hand.

Know your credit history
Some lenders make decisions based on your credit history. Be sure there are no mistakes or missing items in your credit reports. Request a free copy of your credit report every 12 months from AnnualCreditReport.com, which includes reports from the three biggest consumer reporting companies.

Stay in control
Your lender shouldn’t make you feel rushed or unnecessarily delay action on your application.

Be sure before signing
You shouldn’t ever feel pressured to sign. Take the time to make sure the credit product and terms work for you.

Ask questions
Don’t focus only on your monthly payment. Ask about rates and the total amount of interest and fees you may pay over the long run.

Warning signs of discrimination

Credit discrimination often happens behind closed doors, which makes it hard to spot. But there may be warning signs. Pay attention to whether you are:

  • Treated differently in person than on the phone
  • Discouraged from applying for credit
  • Hearing the lender make negative comments about race, national origin, sex, or other factors
  • Refused credit even though you qualify for it based on advertised requirements
  • Offered credit with a higher interest rate than the one on the application, even though you qualify for a lower rate based on advertised requirements

Source: Consumer Financial Protection Bureau: www.pueblo.gpo.gov

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