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Equal Credit Opportunity
Facts for Consumers from the Federal Trade Commission
Equal Credit Opportunity -- September 1992
If you still think only of credit cards when you hear the word
"credit," think again. Credit is used by millions of consumers
for a variety of purposes: to finance education, remodel homes,
obtain small business loans, and for home mortgages.
A law passed by Congress ensures that all consumers will be given
an equal chance to receive credit. The Equal Credit Opportunity
Act says it is illegal for creditors to discriminate against
applicants on the basis of their sex, marital status, race,
national origin, religion, age or because they get public
assistance income. This does not mean all consumers who apply for
credit will get it. Creditors can still use factors such as
income, expense, debts, and credit history to judge applicants.
The law protects you when dealing with any creditor who regularly
extends credit, including: banks, small loan and finance
companies, retail and department stores, credit card companies,
and credit unions. Anyone participating in the decision to grant
credit, such as real estate brokers who arrange financing, is
covered by the law. Businesses applying for credit are protected
by the law, too.
Consumers have equal rights in every phase of the credit
application process. Here is a checklist of important rights to
remember when you request credit:
When You Apply For Credit, A Creditor May Not...
l Discourage you from applying because of your sex, marital
status, age, national origin, or because you receive public
assistance income.
l Ask you to reveal your sex, race, national origin, or
religion. A creditor may ask you to voluntarily disclose this
information if you are applying for a real estate loan. This
information helps federal agencies enforce anti-discrimination
laws. A creditor may ask what your residence or immigration
status is.
l Ask whether you are divorced or widowed.
l Ask what your marital status is if you are applying for a
separate, unsecured account. A creditor may ask you to reveal
this information if you live in the "community property" states:
Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas,
and Washington. In any state, a creditor may ask for this
information if you apply for a joint account or any account
secured by property.
l Ask you for information about your husband or wife. A
creditor may ask about your spouse if: your spouse is applying
with you; your spouse will be allowed to use the account; you are
relying on your spouse's income or on alimony or child support
income from a former spouse; or if you reside in a community
property state (listed above).
l Ask about your plans for having or raising children.
l Ask if you receive alimony, child support, or separate
maintenance payments. A creditor may ask for this information if
you are first told that you don't have to reveal it if you won't
rely on it to get credit. A creditor may ask if you have to pay
alimony, child support, or separate maintenance payments.
When Deciding To Give You Credit, A Creditor May Not...
l Consider your sex, marital status, race, national origin, or
religion.
l Consider whether you have a telephone listing in your name.
A creditor may consider whether there is a phone in your home.
l Consider the race of the people who live in the neighborhood
where you want to buy or improve a house with borrowed money.
l Consider your age, with certain exceptions:
-- if you are too young to sign contracts. Generally, this
applies to those 18 and under.
-- if you are 62 or over, and the creditor will favor you
because of your age.
-- if it is used to determine the meaning of other factors
which are important to credit-worthiness. For example, a creditor
could use your age to see if your income might be reduced because
you are about to retire.
-- if it is used in a scoring system which favors applicants
age 62 and over. A credit-scoring system assigns different points
to your answers to application questions. For example, owning a
home might be worth 10 points, while renting might be worth 5.
The total number of points helps the creditor to decide if
you are credit-worthy.
When Evaluating Your Income, A Creditor May Not...
l Refuse to consider reliable public assistance income in same
manner as other income.
l Discount income because of your sex or marital status. For
example, a creditor cannot count a man's salary at 100% and a
woman's at 75%. A creditor may not assume a woman of
child-bearing age will stop work to raise children.
l Discount or refuse to consider income because it is derived
from part-time employment or from pension, annuity, or
retirement benefits programs.
l Refuse to consider consistently-received alimony, child
support, or separate maintenance payments. A creditor may ask you
for proof that this income has been received consistently.
You Also Have The Right...
l To have credit in your birth name (Mary Smith), your first
and your spouse's last name (Mary Jones), or your first name and
a combined last name (Mary Smith-Jones).
l To get credit without a co-signer, if you meet the
creditor's standards.
l To have a co-signer other than your husband or wife, if one
is necessary.
l To keep your own accounts after you change your name,
marital status, reach a certain age, or retire, unless the
creditor had evidence that you are unable or unwilling to pay.
l To know whether your application was accepted or rejected
within 30 days of filing it.
l To know why your application was rejected. The creditor must
either immediately give you the specific reasons for your
rejection or tell you of your right to learn the reason if you
ask them within 60 days. (Examples of reasons are: "Your income
was low," or "You haven't been employed long enough." Examples of
unacceptable reasons are: "You didn't meet our minimum
standards," or "You didn't receive enough points on our
credit-scoring system.") Indefinite and vague reasons are
illegal_ask for specifics.
l To learn the specific reasons why you were offered less
favorable terms than you applied for. Example of less favorable
terms include higher finance charges or less money than you
requested. This does not hold if you accept the less favorable
terms.
l To know the specific reasons why your account was closed or
why the terms of the account were made less favorable to you.
This does not hold if these actions were taken because your
account was delinquent or because you have not used the account
for some time.
A Special Note To Women
A good credit history, a record of how you paid past bills, is
often necessary to obtain credit. Unfortunately, this hurts many
married, separated, divorced, and widowed women. There are two
common reasons women do not have credit histories in their own
names: they lost their credit histories when they married and
changed their names; and creditors reported accounts shared by
married couples in the husband's name only.
The law says that when creditors report histories to credit
bureaus or to other creditors they must report information on
accounts shared by married couples in both names. This is true
only for accounts opened after June 1, 1977. If you and your
spouse opened an account before that time, you should ask the
creditor to use both names.
If you are married, divorced, separated, or widowed, you should
make a special point to call or visit your local credit bureau(s)
to ensure that all relevant information is in a file under your
own name. To learn more about building your credit file, send for
the free brochure, Women and Credit Histories, by writing: Public
Reference, Federal Trade Commission, Washington, D.C. 20580. You
also can write to this address for a free copy of Best Sellers,
which lists all the FTC's consumer information publications.
What You Can Do If You Suspect Discrimination...
l Complain to the creditor. Make it known that you are aware
of the law. The creditor may reverse the decision or detect an
error.
l Many states have their own equal credit opportunity laws.
Check with your state's Attorney General's office to see if the
creditor violated state laws. Your state may decide to take the
creditor to court.
l Bring a case in Federal district court. If you win, you can
recover your damages and be awarded a penalty. You can also
recover reasonable attorney's fees and court costs. An attorney
can advise you on how to proceed.
l Join with others to file a class action suit. You may
recover punitive damages for the class of up to $500,000 or 1% of
the creditor's net worth, whichever is less.
l Report violations to the appropriate government agency. If
you are denied credit, the creditor must give you the name and
address of the agency to contact. While the agencies do not
resolve individual complaints, they do use consumer comments to
decide which companies to investigate. A list of agencies appears
at the end of this brochure.
Where To Send Complaints and Questions
If a retail store, department store, small loan and finance
company, mortgage company, oil company, public utility company,
state credit union, government lending program, or travel and
expense credit card company is involved, contact the Federal
Trade Commission office nearest you:
FTC Headquarters
Federal Trade Commission
6th & Pennsylvania Ave., N.W.
Washington, D.C. 20580
(202) 326-2222
TDD (202) 326-2502
FTC Regional Offices
1718 Peachtree Street, N.W., Suite 1000
Atlanta, Georgia 30367
(404) 347-4836
101 Merrimac Street, Suite 810
Boston, Massachusetts 02114-4719
(617) 424-5960
55 East Monroe Street, Suite 1437
Chicago, Illinois 60603
(312) 353-4423
668 Euclid Avenue, Suite 520-A
Cleveland, Ohio 44114
(216) 522-4207
100 N. Central Expressway, Suite 500
Dallas, Texas 75201
(214) 767-5501
1405 Curtis Street, Suite 2900
Denver, Colorado 80202-2393
(303) 844-2271
11000 Wilshire Boulevard, Suite 13209
Los Angeles, California 90024
(310) 575-7575
150 William Street, Suite 1300
New York, New York 10038
(212) 264-1207
901 Market Street, Suite 570
San Francisco, California 94104
(415) 744-7920
2806 Federal Building, 915 Second Avenue
Seattle, Washington 98174
(206) 220-6363
If your complaint concerns a nationally-chartered bank (National
or N.A. will be part of the name), write to:
Comptroller of the Currency
Compliance Management
Mail Stop 7-5
Washington, D.C. 20219
If your complaint concerns a state-chartered bank that is insured
by the Federal Deposit Insurance Corporation but is not a member
of the Federal Reserve System, write to:
Federal Deposit Insurance Corporation
Consumer Affairs Division
Washington, D.C. 20429
If your complaint concerns a federally-chartered or
federally-insured savings and loan association, write to:
Office of Thrift Supervision
Consumer Affairs Program
Washington, D.C. 20552
If your complaint concerns a federally-chartered credit union,
write to:
National Credit Union Administration
Consumer Affairs Division
Washington, D.C. 20456
Complaints against all kinds of creditors can be referred to:
Department of Justice
Civil Rights Division
Washington, D.C. 20530
7/82;5/88;10/90
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