There are over 191 million Americans currently using credit cards.
You’ve decided that you need additional credit. You have many outstanding bills or bad credit standing. Regardless, you have turned to credit repair.
Credit repair is important in today’s society, and knowing the ECOA credit law gives you power. This makes it easier to avoid adverse effects when trying to get a loan.
Because of the Equal Credit Opportunity Act guidelines, you must follow certain protocols for approval. Keep on reading to understand better what ECOA is all about and how you can take advantage of this.
Who Benefits from the Equal Credit Opportunity Act
The ECOA is for all credit applicants. They can be businesses, individuals, and organizations. The ECOA law requires creditors to provide equal credit opportunities to all creditworthy applicants.
The ECOA promotes fair lending practices and ensures that all consumers have an equal opportunity to obtain credit. The law benefits both borrowers and lenders.
The law ensures that credit decisions are made based on an applicant’s credit history. Lenders must also look at the ability to repay the debt rather than at any protected characteristic.
What the Act Prohibits
It prohibits lenders from discriminating against borrowers on the basis of race, religion, color, national origin, marital status, sex or age. The ECOA also requires lenders to give applicants equal treatment in credit transactions.
How the Act Protects Consumers
Lenders who comply with the ECOA can be confident that their credit decisions are fair and non-discriminatory. Borrowers treated unfairly can file a complaint with the Consumer Financial Protection Bureau (CFPB).
In order to ensure that ECOA’s prohibitions are followed, the Federal Trade Commission, the Consumer Financial Protection Bureau, and other Federal agencies are authorized to take enforcement action against creditors that engage in discriminatory practices. These agencies may also impose civil penalties on creditors that violate ECOA, including fines of up to $16,000 for each violation.
Exceptions to ECOA
There are several exceptions to the ECOA. Creditors may consider an applicant’s sex when assessing risk in certain credit transactions, such as those involving insurance. Creditors may take an applicant’s marital status into account when making credit decisions.
Age may be a factor in credit decisions when specifically authorized or required by law. Also, creditors may consider an applicant’s national origin when making credit decisions in certain situations, such as when assessing risk in international transactions.
How to Qualify for ECOA
To qualify for ECOA protection, an applicant must have applied for credit. The credit can be for the purpose of purchasing, leasing, or refinancing a real property, personal property, or any other type of consumer credit and can be in the form of a loan, credit card, or line of credit. An applicant does not have to be granted credit to qualify for ECOA protection.
When you apply for an FHA loan, get to know the FHA loan pros and cons first. This will help you decide if this is what’s best for you.
Take the Chance to Apply for Credit Despite Your Circumstance
Borrowers vary in reasons when it comes to requiring a loan. Lenders must give them the chance to apply for a loan regardless of their situation. Also, it is a great thing for them to know the reasons if ever they get denied.
The Equal Credit Opportunity Act is a landmark federal law that prohibits discrimination in lending. If you believe you have been the victim of credit discrimination, you can file a complaint with the right agency.
Read more of our blog for more helpful resources and guides.
