The Equal Credit Opportunity Act (ECOA)

Having trouble getting approved for a mortgage loan or car loan?  Are you being discriminated against because you are a minority or female?  Once upon a time lender's behaved rather badly when it came to approving loans for women and minority groups.  Their discrimination was blatant, denying minority members loans even though they qualified, and asking women all sorts of demeaning questions like "are you on birth control?" or "how many children do you plan to have in the future."  Single woman were often required to get a co-signor or denied credit altogether.   Although it is illegal to discriminate on the basis of race or sex, you can be sure lenders still discriminate at times, particularly if they think they can get away with it.

The Equal Credit Opportunity Act was passed to prohibit lenders from making lending decisions on the basis of sex, race, marital status, religion, national origin, age, or receipt of public assistance.  Creditors may ask for this information (except religion) in certain situations, but may not use it to discriminate when deciding whether to grant credit.

The ECOA protects consumers who deal with companies that regularly extend credit, including banks, finance companies, retail and department stores, credit card companies, and credit unions.  Everyone who participates in the decision to grant credit, including real estate brokers who arrange financing, must follow this law.

Your credit rights under the Equal Credit Opportunity Act:

(1)  You cannot be denied credit or a loan based on your race, sex, martial status, religion, age, or national origin;

(2)  You have the right to have reliable public assistance, child support, and alimony considered in the same manner as other income.  If you choose to not list it on the application, then you have the right to do so;

(3)  If you are denied credit, you have a legal right to know why.  The creditor is required to notify you in writing of the reason why you were denied credit and provide you with the name of the credit bureau used to evaluate your credit rating;

(4)  Lenders cannot require a co-signor (or joint applicant) when a person's income is adequate for the loan approval.  Also, a lender cannot automatically reject a woman's application just because she is a homemaker;

(5)  A woman can apply for a loan using either her married last name or her maiden last name (or hypenate it if she chooses).  A lender can only ask for a woman's marriage status in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas and Washington).

The ECOA and Your Credit Report

If you feel that your credit report does not accurately reflect your creditworthiness, Regulation B, which implements the Equal Credit Opportunity Act, provides that you have the right to present information to a prospective creditor to show that your credit report does not reflect yor ability or willingness to repay.  The creditor must consider this information at your request.  If you know there is adverse information on your credit report it is often best to explain the circumstances surrounding that item and provide other positive information to the creditor at the time you complete an application.  Our credit kit offers sample letters on getting information reported to your credit file.

Filing a Complaint Because of Credit Discrimination

Just because there is a powerful law prohibiting credit discrimination doesn't mean it doesn't still occur.  It isn't that difficult for a lender to find another reason to deny your loan and he will make sure it sounds legitimate.  Most lenders think they can get away with it because the public is largely ignorant of their rights and the odds that they will get caught are rather slim.   But you can file a complaint with the regulating authorities listed below and you have the right to sue to collect up to $10,000 per violation (or $500,000 if it's a class action lawsuit).  There is a sample letter at the bottom of this page.

State Member Banks of the Reserve System
Consumer and Community Affairs
Board of Governors of the Federal Reserve System
20th & C Streets, N.W.; Washington, D.C. 20551

National Banks
Comptroller of the Currency, Compliance Management
Mail Stop 7-5; Washington, D.C. 20219

Federal Credit Unions
National Credit Union Administration
1776 G St., N.W.; Washington, D.C. 20456

Non-Member Federally Insured Banks
Office of Consumer Programs, Federal Deposit Insurance Corporation
550 Seventeenth St., N.W.
Washington, D.C. 20429

Federally Insured S & Ls, and Fed. Chartered State Banks
Consumer Affairs Program, Office of Thrift Supervision
1700 G St., N.W.; Washington, D.C. 20552

Other Credit Card Issuers (includes retail/gasoline companies)
Division of Credit Practices, Bureau of Consumer Protection
Federal Trade Commission
Washington, D.C. 20580

If you believe a lender has discriminated against you on the basis of sex or race, you can file a formal complaint with one of several government agencies that regulate the banking and credit industry.  Below is a sample letter.


Name of Regulatory Agency
City, ST  Zip

Re:  Formal Complaint against [Name of Bank and Bank's address, city and state]      

Dear Sir or Madam:

I recently applied for a loan with the above-referenced bank and was denied credit because (give the reason why the bank told you your application was denied.)  I have attached a copy of the written notification the bank gave me for denying my credit application.

I believe that the true reason this bank denied me credit was based on my (sex or race or marital status) and that this bank has violated my rights under the Equal Credit Opportunity Act. I believe this to be the case for the following reasons: (Pick any / all of the reasons below or add your own):

(1)  My income is sufficient to qualify for the loan.
(2)  My debt-to-income ratio is within an acceptable range.
(3)  I have excellent credit.  My credit score is ____________.
(4)  The loan officer asked me several inappropriate questions about how many children I plan to have and if I plan to get married soon.
(5)  I have firsthand knowledge that (males or whites or Anglos or white males or married women) that have a similar credit profile to mine have been approved for the same type of financing at this bank.

I have attached copies of all pertinent paperwork to this letter for your information.  The person with whom I dealt with at this bank was (provide person's name). 


Your name
Telephone number


The full text of the Equal Credit Opportunity Act
Credit  >  Equal Credit Opportunity Act
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