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What is the Equal Credit Opportunity Act?
The Equal Credit Opportunity Act
(ECOA) is federal law that prohibits creditors from certain forms of
discrimination. Age (as long as you are old enough to enter into a
legally binding contract), race, color, national origin, gender,
marital status, religion, or receipt of public aid may not be used to:
- Discourage or prevent you from applying for credit,
- Refuse you credit which you otherwise qualify for,
- Give
you less credit, or credit on terms different from those who have
similar credit risks (permissible risk factors include ability to pay,
credit record, stability and assets owned)
- Deny you credit
because you exercised your rights under federal laws such as the
Consumer Credit Protection Act, the Fair Credit Billing Act, or the
Fair Credit Reporting Act.
A lender is allowed to use a
statistically sound scoring system that is derived from empirical data
as long as being 62 years or older is not assigned a negative value in
the scoring system.
Under ECOA, a creditor is required to notify
you within 30 days after you have completed your credit application
whether your application has been approved or denied. If credit is
denied, the reasons for the declination must be provided or you must be
told how to obtain such information.
Violation of ECOA may be
redressed by filing a federal lawsuit for the actual damages you have
suffered plus punitive damages of up to $10,000.
(Reviewed 10.31.2008)
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