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Equal Credit Opportunity Act (ECOA)

Posted on: 01st Apr, 2004 10:06 pm
ECOA or Equal Credit Opportunity Act is a Federal law introduced in 1976 to protect the interest of the borrowers while they deal with creditors. Creditors like banks, finance companies, retail and department stores, credit card companies, credit unions and real estate brokers are included under this Act. As per this Act, the creditors can't discriminate borrowers on the following aspects while granting a loan.
  1. Race.
  2. Color.
  3. Religion.
  4. National origin.
  5. Sex.
  6. Marital status.
  7. Receipt of income from public assistance programs.
  8. The exercise of any right under the Consumer Credit Protection. Act.
There are some other areas where the creditor can't question a borrower or take decisions based on certain criteria.
  • Whether the borrower has telephone listing in his name.
  • The race of people occupying properties in the nearby areas where the borrower wants to purchase his house or make renovations.
  • Creditors should not consider a borrower's age unless the latter is below 18 years of age or above 62 years. They should also take into account any benefits earned by borrowers.
  • Public assistance income should not be treated in a similar way as any other income.
Under the ECOA, borrowers have certain rights and can complain in case the creditors violate any part of the Law. These rights include:
  • A borrower can avail credit even without a cosigner provided he can fulfill the standards set up by the creditor.
  • The borrower can select a cosigner other than his/her spouse.
  • He can continue with his own accounts even if there is a change in name, marital status or age.
  • The borrower has the right to know the reason for rejection of his application. But he should enquire within 60 days of the rejection.
  • He has the right to know why he has received less favorable terms compared to what he has applied.
  • A borrower should be informed about why his account has been closed.
In case of any problem with the creditors, a borrower is free to file a complaint with the creditor. He can also check out with an attorney if there is any violation of the laws. The borrower can file a case with the Federal District Court and he is eligible to claim for compensation if he wins the case.

Hi, I wanted to know more about ECOA, can anyone tell me what it covers.
Posted on: 09th Jan, 2006 10:47 am
Hi Flavia,

The Equal Credit Opportunity Act (ECOA) protects your interest while you deal with your creditors. The creditors may be banks, finance companies, retail and department stores, credit card companies, and credit unions. Real estate brokers also come under the purview of the law.
Equal Credit Opportunity Act specifies that when you apply for credit, a creditor should not

  • At the time of applying, discourage you because of your sex, marital status, age, race, national origin.
  • Demand disclosure of your race, national origin, or religion. A creditor may ask you to voluntarily disclose this information (except for religion) if you’re applying for a mortgage loan. This information helps federal agencies enforce anti-discrimination laws.
  • Enquire about your marital status, i.e., whether you are a widow or divorced.
  • Claim disclosure of your marital status if you’re applying for a separate, unsecured account. If you live in "community property" states like Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, and Washington then creditor may ask you to provide this information.
  • Ask for information about your spouse, except when you are relying on your spouse’s income or when your spouse has submitted the application along with you.
  • Request information about your future family plans.
  • Ask you to reveal whether you receive separate maintenance payments, child support or alimony

Hope this information will help you.

God bless you.

For MortgageFit,
Posted on: 09th Jan, 2006 11:11 am
a creditor when deciding to give you credit, may not

  • take into consideration whether you have a telephone listing in your name.
  • take his decision after considering the race of people in the neighborhood where you want to buy, refinance or improve a house with the money borrowed.
  • consider your age, unless:

    • you’re younger than 18 years and cannot sign contracts;
    • you are getting some advantage because of your old age (i.e., 62 or older);
    • the age is used to determine the effect it is going to have on other factors that may have an impact on your credit report.
    • it’s used to determine your credit score based on a system that favors applicants aged 62 and older.

i will feel glad if you benefit from this information.

Posted on: 09th Jan, 2006 02:00 pm
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