How can I protect myself from credit discrimination?
Watch for warning signs
Credit discrimination is often hidden or even unintentional, which makes it hard to spot. Look for red flags, such as:
- Treated differently in person than on the phone or online
- Discouraged from applying for credit
- Encouraged or told to apply for a type of loan that has less favorable terms (for example, a higher interest rate)
- Hearing the lender making negative comments about race, national origin, age, sex (including sexual orientation or gender identity), or other protected statuses
- Refused credit even though you qualify for it based on advertised requirements
- Offered credit with a higher rate than you applied for, even though you qualify for a lower rate based on advertised requirements
Ways to prepare before taking out a loan
- Do your research. Shop around. Learn about the benefits and risks of the loan or credit card you want. Research current interest rates. Compare offers from several lenders.
- Know your credit history. Be sure there are no mistakes or missing items in your credit reports. You have the right to request one free copy of your credit reports each year, from each of the three biggest consumer credit reporting companies, by visiting AnnualCreditReport.com. When you visit the site, you may see steps to view more frequently updated reports online. This gives you a greater ability to monitor changes in your credit. If needed, you can ask whether your credit report is available in your preferred language.
- Ask questions about total costs. Look beyond the monthly payment. Be sure you understand your interest rates and the total amount of interest and fees paid over the long run. Ask about which fees and charges may be negotiable.
- Stay in control. Lenders shouldn’t make you feel rushed or unnecessarily delay action on your application. You have a right to receive information in writing -- and in most cases, that means you get timely information on the decision a lender has made about your application for credit.
- Be sure before signing. You shouldn’t ever feel pressured to sign. You should take the time to make sure the credit product and terms work for you. If needed, ask the lender whether help is available in your preferred language.
Get legal help if you believe you have been discriminated against
For legal resources listed state by state, visit lawhelp.org .
To find out about eligibility for assistance from a Legal Services program funded by the Legal Services Corporation, visit lsc.gov/what-legal-aid/find-legal-aid .
To locate your state attorney general’s office, see naag.org/find-my-ag/ .
FAQs
It is illegal to:
What are the laws against credit discrimination? ›
The Equal Credit Opportunity Act (ECOA) prohibits discrimination in any aspect of a credit transaction. It applies to any extension of credit, including extensions of credit to small businesses, corporations, partnerships, and trusts.
What three federal laws offer protection against lending discrimination? ›
Today, three federal laws offer protection against such discrimination:
- The Fair Housing Act (FHA)1.
- The Equal Credit Opportunity Act (ECOA)2.
- The Community Reinvestment Act (CRA)3.
prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age, because an applicant receives income from a public assistance program, or because an applicant has in good faith exercised any right under the Consumer Credit Protection ...
What are your rights if you are denied credit? ›
You have the right to get a free copy of your credit report within 60 days of being denied credit. Simply contact the credit reporting agency that provided the credit report and ask for a free report. You can also get a free credit report every 12 months.
What are my FCRA rights? ›
The FCRA also gives consumers certain rights, including free access to their own credit reports at least once a year. Violations of the FCRA can carry fines, including damages if any are incurred. Enforcement of the FCRA falls to the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB).
What are three federal laws that help protect consumers from unfair credit practices? ›
The Truth in Lending Act ensures that creditors provide complete and honest information. The Fair Credit Reporting Act regulates credit reports. The Equal Credit Opportunity Act prevents creditors from discriminating against individuals. The Fair Debt Collection Practices Act established rules for debt collectors.
What are the federal protections against discrimination? ›
Title VII of the Civil Rights Act, as amended, protects employees and job applicants from employment discrimination based on race, color, religion, sex and national origin.
What is a red flag for an Equal Credit Opportunity Act violation? ›
Look for red flags, such as: Treated differently in person than on the phone or online. Discouraged from applying for credit. Encouraged or told to apply for a type of loan that has less favorable terms (for example, a higher interest rate)
What is the Unfair lending Act? ›
The Truth in Lending Act (TILA) protects you against inaccurate and unfair credit billing and credit card practices. It requires lenders to provide you with loan cost information so that you can comparison shop for certain types of loans.
The Act (Title VI of the Consumer Credit Protection Act) protects information collected by consumer reporting agencies such as credit bureaus, medical information companies and tenant screening services. Information in a consumer report cannot be provided to anyone who does not have a purpose specified in the Act.
What is the Equal Credit Opportunity Act Amendment? ›
This Act (Title VII of the Consumer Credit Protection Act) prohibits discrimination on the basis of race, color, religion, national origin, sex, marital status, age, receipt of public assistance, or good faith exercise of any rights under the Consumer Credit Protection Act.
What is Section 704 of the Equal Credit Opportunity Act? ›
Section 704B of the Equal Credit Opportunity Act (ECOA), as added by Section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act or Act), requires that financial institutions collect and report information concerning credit applications made by women- or minority-owned businesses and ...
What can you do when your legal rights regarding credit have been violated? ›
You have the right to bring a lawsuit.
Credit reporting companies that break the law can be held liable for damages and attorney fees. In the case of a willful failure to comply with the law, the company can be liable for actual or statutory damages and punitive damages.
What are the three types of consumer credit discrimination? ›
Types of Lending Discrimination
The courts have recognized three methods of proof of lending discrimination under the ECOA and the FHAct: Overt evidence of disparate treatment; • Comparative evidence of disparate treatment; and • Evidence of disparate impact.
Do lenders have to tell you why you were denied? ›
If anyone knows why you've been denied a mortgage, it's going to be your lender. According to the Equal Credit Opportunity Act, lenders are required to tell you why you've been turned down, if credit played a role.
Is it legal to discriminate based on credit score? ›
What is credit discrimination? The Equal Credit Opportunity Act makes it illegal for a creditor to discriminate in any aspect of credit transaction based on certain characteristics.
What is an example of credit discrimination? ›
Examples of discriminatory actions:
a finance company imposes different terms or conditions, like a higher interest rate or higher fees, on a loan based on an applicant's religion or national origin. an underwriter refuses to guarantee a loan because of an applicant's sex.
Which regulation makes it illegal for creditors to discriminate? ›
Regulation B contains two basic and comprehen sive prohibitions against discriminatory lending practices (section 202.4): A creditor shall not discriminate against an applicant on a prohibited basis regarding any aspect of a credit transaction.
What is the Fair Credit Reporting Act law? ›
The Fair Credit Reporting Act (FCRA) , 15 U.S.C. § 1681 et seq., governs access to consumer credit report records and promotes accuracy, fairness, and the privacy of personal information assembled by Credit Reporting Agencies (CRAs).
