We all know that it can be hard to get credit if you’re poor. People expect that credit decisions may be made based on their income, or whether their job is stable, or whether they’ve ever had a bill go into collections. But what if you’re a minority, or a woman, or young, or divorced? Can a creditor base a decision whether to give you a mortgage, car loan, or credit card on those factors?
In short, the answer is “No.” The Equal Credit Opportunity Act protects consumers from being discriminated against on certain criteria when seeking credit. Creditors are not allowed to use your race, religion, national origin, sex, marital status, age, or the fact that your receive public assistance when making decisions about whether to lend to you or when setting terms of a credit offer.
Creditors are allowed to make decisions about whether you’re creditworthy based on your income, your expenses, your existing debt, and your credit history. A creditor also can consider whether you’re an immigrant and will be able to stay in the United States long enough to repay the loan, credit card, or other debt.
The ECOA is applicable to people or businesses that regularly extend credit, such as:
- Credit Unions
- Loan Companies
- Finance Companies
- Retail Stores
- Department Stores
- Credit Card Issuers
The ECOA also is applicable to other businesses or people involved at any point in the process of making a decision about your creditworthiness. For example, a real estate agent that helps arrange a mortgage for you cannot discriminate against you based on any of the factors listed above when facilitating financing for your home purchase.
Discrimination basically means that you’re treated unfavorably because of a factor such as your race, religion, sex, nationality, marital status, age, or because you receive public assistance. If one of those applies to you, you may be considered a member of what is known legally as a protected class. Actions that might be considered discrimination can include:
- Discouraging you from applying for credit
- Rejecting your application
- Charging you higher interest rates or higher fees
If the creditor who denied your credit application or gave you unfavorable terms routinely approves credit for people who are not part of your protected class, but who have similar incomes or credit histories, or gives them better terms, you may have a case for discrimination.
If you believe that a creditor has discriminated against you because of you are part of a protected class, you have a few options for addressing the wrong. The Federal Trade Commission suggests these possible actions:
- Make a complaint to the creditor and try to convince the creditor to reconsider your credit application
- Make a complaint to your state attorney general’s office
- Report the possible violation to a federal agency such as the FTC or Consumer Financial Protection Bureau
You also may consider the option of suing the creditor in a civil court. If you sue, you may be able to recover compensation for the actual costs or losses you experienced because of the discrimination, plus your court costs and attorney fees. You also may be able to receive up to $10,000 in punitive damages if the creditor willfully discriminated against you.
If you believe a creditor has violated your rights under the Equal Credit Opportunity Act, the Ohio consumer protection lawyers at Luftman, Heck & Associates at (888) 726-3181 can listen to your story and explain your options. Call us for a free consultation today.