What Is the Purpose of the Equal Credit Opportunity Act?
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What Is the Equal Credit Opportunity Act (ECOA)?
What Is the Purpose of the ECOA?
What Is Covered Under the ECOA?
Race Color Religion National origin (the country where you or your ancestors were born) Sex (including gender, sexual orientation, and gender identity) Marital status Age (beyond minimum age requirements, such as being 18 or older) Participation in a public assistance program (such as the Supplemental Nutrition Assistance Program, aka SNAP, or Social Security Disability Insurance, or SSDI)
What Did the ECOA Do?
Who Does the ECOA Apply To?
Equal Credit Opportunity Rights
Credit score Credit history Income Existing debt Impose different terms or conditions — such as a higher interest rate or higher fees — based on your race, color, religion, national origin, sex, marital status, age, or whether you receive public assistance. Refuse to consider reliable public assistance in the same way as other income. Ask about your marital status if you’re applying for a separate, unsecured account. Ask if you’re widowed or divorced. Consider the racial composition of the neighborhood where you want to buy, refinance, or improve a house with money you are borrowing.
Limitations on Certain Information
You’re applying for a joint loan or credit card. You want to add your spouse as an authorized user on your account. Your spouse is the joint owner of the collateral you’re using to secure a loan. You reside in a community property state such as Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin. Any information you include on your loan application comes from your spouse (or former spouse in the case of child support or alimony)
Examples of ECOA Enforcement
In 2015, the CFPB found that American Honda Finance Corporation’s pricing policies resulted in thousands of African-American, Hispanic, and Asian and Pacific Islander borrowers paying higher interest rates for their car loans because of their race and national origin. Honda Finance was ordered to pay $24 million in relief to all the borrowers who were overcharged. In January 2017, a $53 million settlement was made against JP Morgan Chase for lending discrimination based on race and national origin. The DOJ found that the bank's brokers charged higher interest rates to Black, Indigenous, and People of Color than they did white borrowers before and during the 2008 financial crisis.
Other Laws That Protect Borrowers
Make sure that the information they collect about you is accurate Give you a free copy of your report once every 12 months (as a result of the pandemic, however, all three credit reporting bureaus are allowing free weekly reports through 2022) Give you a chance to fix any mistake
Finding the Credit Card That's Right for You
Frequently Asked Questions
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