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 protects consumers from discrimination in the granting or denying of credit? ›
Equal Credit Opportunity Act | Federal Trade Commission.
What is an example of credit discrimination? ›
It's when a creditor blatantly discriminates against a borrower on the basis of their protected trait like race, color, nationality, religion, and sex. For example, a loan officer tells you outright they refuse to approve your small-business loan because you're Muslim.
What are the protections of the Equal Credit Opportunity Act? ›
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 my FCRA rights? ›
Basic Consumer Rights
You have a right to a free copy of your credit report within 15 days of your request. Protected Access – The FCRA limits access to your file to those with a valid need. That would usually be banks, insurance companies, employers, landlords or others doing business that involves offering credit.
Can you sue for being denied credit? ›
Consider suing the creditor in federal district court. If you win, you can recover your actual damages. The court might award you punitive damages under certain circ*mstances. You also may recover reasonable lawyers' fees and court costs.
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 does title VII prohibit? ›
Title VII prohibits employment discrimination based on race, color, religion, sex and national origin. The Civil Rights Act of 1991 (Pub.
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)
Common violations of the FCRA include:
Failure to update reports after completion of bankruptcy is just one example. Agencies might also report old debts as new and report a financial account as active when it was closed by the consumer. Creditors give reporting agencies inaccurate financial information about you.
What is credit defamation? ›
The tort of defamation allows a person to recover damages where their reputation is harmed by false written or oral statements of another that are made to a third person. Lenders and creditors who provide information about a person to a credit bureau certainly provide written or oral statements to a third person.
What is the Fair Loan Act? ›
What is fair lending? Fair lending prohibits lenders from considering your race, color, national origin, religion, sex, familial status, or disability when applying for residential mortgage loans. Fair lending guarantees the same lending opportunities to everyone. Is there a law that protects my fair lending rights?
What is the Federal Consumer Credit Protection Act? ›
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? ›
Two years after enacting ECOA, Congress significantly broadened the Act to prohibit discrimination on bases in addition to sex and marital status. These bases now generally include “race, color, religion, national origin, sex or marital status, or age” as well as the receipt of public-assistance income.
What is retrospective relief? ›
Retrospective Relief: In this case, the government will give credit of an earlier ineligible input credit to the taxpayer either based on registration or if a previous exempt supply becomes newly taxable.
What are the laws protecting consumers against unfair credit practices? ›
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. The Electronic Fund Transfer Act protects consumer finances during electronic payments.
What are the three laws created to stop 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.
Is it illegal to deny someone credit? ›
It is illegal to:
Refuse you credit if you qualify for it. Discourage you from applying for credit. Offer you credit on terms that are less favorable, like a higher interest rate, than terms offered to someone with similar qualifications.
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).
